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Uncertainty as Bombardier Exits Commercial Aviation, Uganda Airlines Insists No Worries

Uganda Airlines has said it is not worried about yesterday’s announcement that Canadian plane makers Bombardier Inc. was selling its regional-jet business to Japan’s Mitsubishi Heavy Industries Ltd.

The acquisition of Bombardier’s CRJ program at $55Million by the Japanese Multinational, marks the end of the Canadian plane maker’s run in commercial aviation.

Uganda Airlines last year made and order for four CRJ900s, two of which have been delivered. The next two are expected later this year.

The two aircraft are part of the 42 CRJs orders that the company has not yet delivered.

Bombardier said in a statement yesterday that it will continue to assemble the CRJs on behalf of Mitsubishi, until mid-next year, when it finishes delivering on its remaining backlog.

When contacted on Wednesday, Uganda Airlines CEO Ephraim Bagenda told this website that they had received communication yesterday about the sale of Bombardier’s CRJ program.

“Of Course we are customers, we are the first people to receive communication. Yesterday, they informed us officially, but we have known about this all along,” he said.

The Ministry of Works and Transport however, had not been informed about the sale, according to Permanent Secretary, Mr Waiswa Bageya.

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Mr Bagenda told us nonetheless, that he anticipates no major hindrance from the transition on the airline.

“This has not impact at all on us, we shall continue operating as usual.”

Uganda Airlines operations, according to Bagyenda’s will not have much bearing on the manufacturer after the deliveries have been made.

“All we need from them is just spare parts and a few other services, and all this remains in Canada; nothing is going to Japan,” he said.

According to the sale agreement, Mitsubishi, which has been struggling for decades to get into commercial aviation, “will acquire the maintenance, support, refurbishment, marketing, and sales activities for the CRJ Series aircraft, including the related services and support network located in Montréal, Québec, and Toronto, Ontario, and its service centres located in Bridgeport, West Virginia, and Tucson, Arizona, as well as the type certificates.”

Mitshubishi in 2008 launched plans to develop its own 90 passenger airliner, the MRJ (Mitsubishi Regional Jet) but with little success.

Its first order, which was due for delivery in 2013, has never been delivered.

The acquisition therefore of the CRJ’s profitable spare parts sales, engineering expertise and heavy maintenance centers is hoped to help Mitsubishi’s critical customer support functions, a strategic business area for the company in the pursuit of future growth.

Some experts however, have expressed fear that yesterday’s deal was not forthcoming on how Mitsubishi plans to incorporate Bombardier’s different technology in its operations.

Business Analyst Sho Fukuhara said the brokerage had a negative impression of the deal due in part to concerns that the aftermarket (parts) business’ financials were not disclosed.

“We have limited visibility for synergies by applying the aftermarket experience of 30-year-old CRJ series to MHI’s SpaceJet that has most advanced technology,” Fukuhara said in a note to clients.

Meanwhile the news of the sale yesterday sent shockwaves among Bombardier employees, many of who are expected to lost their jobs.

Bomberdeir CEO Alain Bellemare said about 400 workers producing the CRJ in the Montreal-area would likely find other jobs.

Bombardier has 1,600 employees at the factory, according to spokesman Olivier Marcil. Of those, three quarters will join Mitsubishi while the rest remain to carry out the current CRJ production run until 2020.

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