TOKYO -- Mitsubishi Heavy Industries said Thursday that it will formally acquire Bombardier's regional jet program on June 1, nearly a year after the deal was first announced, but said it will likely write down the entire value of the acquisition.
Mitsubishi Heavy first announced it would acquire the Canadian Regional Jet, or CRJ, program on June 25 for $550 million (58.4 billion yen). The Japanese company now says it will write down the value of the acquisition in the current fiscal year, which ends March 2021 by an estimated 50 billion to 70 billion yen.
The acquisition nevertheless marks a critical milestone for Mitsubishi Heavy's own regional jet program, SpaceJet, which is set for release in Japan next year and in the U.S. in 2023.
The CRJ program, which will operate under the name MHI RJ Aviation Group, will provide maintenance, repair and marketing capabilities for Mitsubishi Heavy in North America and Europe.
The announcement comes amid a major turmoil in the aviation industry. The coronavirus pandemic has forced countries to close their borders and impose restrictions on international air travel in an attempt to stop the spread of the virus, causing a sharp drop in demand for international air travel.
Boeing was forced to cancel its acquisition of Brazil's Embraer, the dominant regional jet maker and the rival of Mitsubishi Heavy, on April 25.
With a range of 2,000 nautical miles or 3,700 km, SpaceJet is aimed at North America and Europe. Mitsubishi Heavy declined to comment on the outlook for the domestic passenger jet markets in those countries.
SpaceJet, Japan's first commercial passenger jet program, is operated by subsidiary Mitsubishi Aircraft.
After the acquisition, the CRJ program will provide maintenance and repair services, as Mitsubishi Heavy aims to sell SpaceJet as a replacement for CRJ's aging passenger jet fleet.
The sale marks the end of commercial jet business at Bombardier, which already sold its larger C-Series passenger jet program to Airbus in 2018.
Mitsubishi Heavy is scheduled to report earnings for the year ended March 2020 on Monday.