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Deliveries of Japan's domestic-made passenger jet delayed for 5th time, production costs spike

Xinhua, January 23, 2017 Adjust font size:

Mitsubishi Heavy Industries Ltd. said Monday delivery to its customers of Japan's first locally made passenger jet would be delayed for a fifth time by two years until at least the middle of 2020 owing to price hikes and safety issues.

According to Mitsubishi Chief Executive Officer, Shunichi Miyanaga, development costs for the Mitsubishi Regional Jet (MRJ) would likely increase by around 100 billion yen (880 million U.S. dollars) from the current projection, to 400-500 billion yen (3.5 billion U.S. dollars to 4.4 billion U.S. dollars).

The company's Chief Financial Officer Masanori Koguchi had previously said in June that the jet's development costs had already tripled to around 600 billion yen (5.2 billion U.S. dollars) from first estimates, but no fixed information as yet has emerged about the exact cause of the ever-increasing costs.

The latest delay is "due to revisions of certain systems and electrical configurations on the aircraft to meet the latest requirements for certification," the Tokyo-based maker said in a statement.

"Before we started, we should have studied the difficulties of development," Miyanaga told a press conference, admitting that his company had been overly-optimistic about its ability to become the first fully-domestic-made passenger jet in Japan.

Three MRJ planes have been flown to the U.S. for testing since last year, however, and despite the setbacks the company still seems confident that with its innovative design, including the jet's narrow fuselage and fuel-efficient engines, it will still be able to compete in its niche market, despite the delays.

It said that it has sold 447 of its jets, although half of these orders carry cancellation clauses that could come into play if there are further delays or cost hikes.

The MRJ, developed by Mitsubishi Aircraft Corp., a subsidiary of Mitsubishi Heavy Industries Ltd., is the first domestically produced airliner since Nihon Aircraft Manufacturing Corp.'s YS-11 turboprop planes went out of operation here in 1974.

The MRJ's are suppose to tap into the market for passenger jets with less than 100 seats, with the MRJ taking aim at the likes of Brazil's Embraer SA and Canada's Bombardier Inc. who both hold sway in their respective markets.

ANA Holdings Inc., one of the MRJ's first customers, has been told it will receive its order for the jet two years later than expected in 2020.

"We're explaining everything in detail to our stakeholders," Miyanaga said. "We're facing the risks and taking a forward-looking attitude."

ANA, for its part, said that the MRJ's will support the carrier's fleet.

"We remain confident of the benefits the MRJ will bring to the ANA fleet in terms of performance and passenger comfort," ANA said in a statement on the matter. Endit