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Mitsubishi’s new jet faces sales challenges in slow market

The Yomiuri Shimbun

By Yu Toda and Jun Onoda / Yomiuri Shimbun Staff WritersBy Yu Toda and Jun Onoda

Yomiuri Shimbun Staff Writers

PARIS — Mitsubishi Aircraft Corp., which is developing the first domestically produced passenger jet, laid out a new strategy aimed at winning more orders at the International Paris Air Show, the largest aviation trade show in the world, which was held from June 17 through 23. However, the aircraft market is slowing down amid uncertainties over the global economy, making the future of Mitsubishi Aircraft’s target market unclear.

Serious about sales

Mitsubishi Aircraft, which changed its jet’s name from Mitsubishi Regional Jet (MRJ) to Mitsubishi SpaceJet, showed off the design and interior of a new model aimed at the U.S. market.

At a press conference, Mitsubishi Aircraft President Hisakazu Mizutani said: “In terms of performance, we can take on any competitor. We are looking forward to receiving active business offers [for our jets].”

The aircraft on display was painted white with “SPACEJET” lettering on the side. This was the public’s first look at the 70-seat type, which can have up to four seats per row and allows for first and business class seating. The company aims to have it on the market in 2023.

The firm first developed a 90-seat type, but its delivery date has been pushed back five times. The company now aims to start delivery in mid-2020, about a year from now, and is putting out a serious sales effort.

No new orders

Usually at the International Paris Air Show, manufacturers vie to reveal big orders and there are numerous announcements of negotiations over orders for hundreds of planes at a time.

Things are slow this year though. On the show’s first day, Airbus SE of Europe got an order for about 100 planes and Embraer SA of Brazil won one for about 40 planes.

In its proposals, Mitsubishi Aircraft has been telling the airlines, “If you fly the SpaceJet on this new route, you can expect this much profit.” However, the firm has yet to announce any new orders.

The airlines are skittish about a global economic slowdown due to factors such as mounting friction between the United States and China. In North America, the world’s largest market, “interest rates are rising and airline companies, which hate increased costs, are staying away from purchases,” an industry source said.

Shot at victory

Mitsubishi Aircraft is aiming at the market for “regional” jets that have less than 100 seats.

Worldwide, there were about 2,400 such aircraft in operation as of the end of 2018. Demand for about 5,000 new regional jets is expected in the next 20 years. Yet, the bigger companies in the world are withdrawing from the sector.

Embraer is transitioning to the market for jets with 100 or more seats, which offers larger profits. Bombardier Inc. of Canada is planning to withdraw from the passenger plane business. Mitsubishi Heavy Industries, Ltd., Mitsubishi Aircraft’s parent company, has agreed to buy Bombardier’s passenger jet business for $550 million.

Mitsubishi Aircraft is expected to spend more than ¥800 billion on development and needs steady orders to get the business on track.

“Companies that deal in regional [jets] are all in difficult management straits,” Katsuhiko Sugiyama, an industrial analyst who is an expert on the industry, said. “Mitsubishi is the only one developing in the 70-seat class. It has a chance to break into the market.”

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