Mitsubishi Heavy Slashes Budget for the SpaceJet Program

By Ankur Deo | May 21, 2020

The current situation in aviation has led to a substantial decrease in funding for development and research for newer aircraft. Recently, Mitsubishi Heavy Industries (MHI) has stated its decision to cut more than half of the annual development budget for its ‘SpaceJet’ regional aircraft. The company has blamed the coronavirus pandemic as it has marginalised profits.

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Mitsubishi Heavy President and Chief Executive Officer Seiji Izumisawa stated:

‘We will proceed with the project at an appropriate scale while taking into account the difficult circumstances the group faces.’

MHI also stated that development for the 70-seat version of the SpaceJet (M-100 model), which was particularly designed for the U.S. aviation market, will be suspended until further notice, as demand from the airlines has evaporated completely, amidst the ongoing crisis. The most recent deadline for this program was previously set around 2023.

The company, has not given any update on the plans to deliver the first 90-seat version (M-90 model) of the SpaceJet. This program was earlier delayed until the fiscal year starting April 2021. The final prototype for the longer variant was finished in January 2020, and it was scheduled to be tested in the to the U.S.A. for test flights in the spring, however, this has not yet happened due to the pandemic.

MHI also posted an operating loss for the first time in twenty years this March. The company suffered a loss of ¥263.3bn ($274mn) related to the SpaceJet project, as it reported substantial impairment losses from its planned acquisition of the Bombardier CRJ program. It has forecast an operating loss of ¥120bn ($132mn) for its regional jet unit this business year.

A Mitsubishi spokesman stated:

‘Company and program leadership have been busy determining the effect on company and program operations, and evaluating our options to continue the progress we have made over the last few years.’

With the uncertainty lingering around aviation business currently, it is certainly tough to see development of newer aircraft starting any time soon.

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