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 Developed for $1.9 billion by a subsidiary of Mitsubishi Heavy
Industries that includes Toyota Corp as a shareholder, the $42
million regional jet, with just under 100 seats, is Japan's second
bid at breaking into the commercial aircraft market.
The last attempt in the 1960s, which failed, was a 64-seat turboprop
dubbed the YS-11. Only 182 planes were ever built.
Mitsubishi has so far won 191 firm orders from customers including
U.S. regional groups Trans States Holdings and SkyWest Inc, and
Japan Airlines Co Ltd.
That, say analysts, is below the several hundred planes it will need
to sell to break even and far behind the number of orders it will
need to overtake market leader, Brazil's Embraer SA.
That goal presents a "significant challenge," said Rob Morris, head
of consultancy at aviation market specialist Ascend.
The MRJ's biggest selling point, Mitsubishi says, is the ability to
burn 20 percent less fuel than aircraft of similar size thanks to
new-generation engines from Pratt & Whitney, a subsidiary of United
Technologies Corp.
The plane, however, is already three years late because of design
and development problems allowing Embraer to catch up. For
Mitsubishi, it means a sprint to complete flight tests before the
first delivery in June 2017 to ANA Holdings Inc.
CHALLENGING NUMBERS
Mitsubishi, which is also challenging Canada's Bombardier Inc,
estimates demand for 5,000 regional jets over the next 20 years of
which it aims to capture a half. Ascend puts its prospects closer to
a fifth and forecasts a market for 4,071 jets worth $128.3 billion
by 2033.
Embraer will supply 2,489 of those and Mitsubishi 913, with
Bombardier and newcomers from Russia and China making up the rest,
according to the Ascend Flightglobal Fleet Forecast.
Mitsubishi's problem is Embraer's headstart of over 1,000 aircraft
orders, along with an established reputation for financing,
reliability and after-sales service, said Richard Aboulafia, vice
president of analysis at consultancy Teal Group.
After the MRJ came into the picture, Embraer said it would upgrade
its E-Jets with the same fuel efficient Pratt & Whitney engines
under the name E2. These will be delivered from 2018 only a year
after the delayed MRJ.
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"The E-Jet E2 will produce economics every bit as competitive as the
MRJ, despite the lack of clean-sheet design," said Morris.
Mitsubishi has a better chance of displacing Bombardier, which has
bet big on developing its CSeries to break into the market for
150-seat aircraft at the expense of its CRJ regional jets, said
Aboulafia.
INDUSTRY AID
The MRJ's biggest success could be helping Japanese industry win
component supply deals because it will prove to Boeing Co and other
manufacturers like Airbus Group NV that Japan is capable of taking
on more work. Doing so could help make up for less work building
military aircraft.
Skills acquired on the YS-11 program helped Mitsubishi Heavy and
other companies forge ties with Boeing.
They have a major work-share on the U.S. plane maker's 777 and 767
aircraft and build 35 percent of the carbon composite 787 Dreamliner.
That work employs 22,000 people or two-fifths of Japan's aerospace
engineers.
A government official overseeing Japan's aerospace business who
spoke to Reuters likened the MRJ project to a 1,000-year-old Shinto
renewal rite at the Ise Grand Shrine in central Japan near to
Mitsubishi's MRJ plant. Shrine buildings are toppled and rebuilt
every twenty years to pass on traditional building skills young
carpenters.
"A regional jet won't be nearly as important, in terms of profits
and technology development, as Japan's hugely important role as an
aerostructures provider, particularly to Boeing, " said Aboulafia.
(Editing by Christopher Cushing)
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