Mitsubishi Jet Gets U.S. Buyers’ Backing After Delay

Mitsubishi Heavy Industries Ltd. (7011)’s new regional jet, Japan’s first such aircraft, won fresh support from U.S. commuter carriers SkyWest Inc. (SKYW) and Trans States Holdings even as its debut was delayed by more than a year.

SkyWest and Trans States said yesterday they are in talks about a new timetable with Mitsubishi’s aviation unit, Mitsubishi Aircraft Corp., after the Nagoya, Japan-based planemaker pushed back deliveries of the 78- and 92-seat models until 2017’s second quarter from March 2016.

The postponement adds to Mitsubishi’s struggles as it tries to challenge regional-jet builders Bombardier Inc. (BBD/B) and Embraer SA. (ERJ) It was at least the second delay after Mitsubishi said in April 2012 that the first flight was late while it confirmed fabrication processes and completed technical studies.

“There will be some slight modification to deliveries,” SkyWest Chief Financial Officer Michael Kraupp said by telephone from the company’s headquarters in St. George, Utah. “We’re working those out, as we speak, with Mitsubishi. But in general, it doesn’t change our strategy and the need for the aircraft.”

SkyWest, a commuter carrier that serves as a partner of United Airlines (UAL), committed a year ago to 100 of the Mitsubishi planes, valued at $4.2 billion. Montreal-based Bombardier, the maker of the CRJ900 and CRJ1000 regional jets, historically had supplied aircraft to SkyWest.

Photographer: Kiyoshi Ota/Bloomberg

A model of Mitsubishi Aircraft Corp.'s Mitsubishi Regional Jet (MRJ) passenger aircraft is displayed at Mitsubishi Heavy Industries Ltd.'s Nagoya Aerospace Systems Works Tobishima Plant in Tobishima village, Aichi prefecture, Japan. Close

A model of Mitsubishi Aircraft Corp.'s Mitsubishi Regional Jet (MRJ) passenger aircraft... Read More

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Photographer: Kiyoshi Ota/Bloomberg

A model of Mitsubishi Aircraft Corp.'s Mitsubishi Regional Jet (MRJ) passenger aircraft is displayed at Mitsubishi Heavy Industries Ltd.'s Nagoya Aerospace Systems Works Tobishima Plant in Tobishima village, Aichi prefecture, Japan.

‘Very Disappointed’

Trans States is “very disappointed” by the delay while continuing to work closely with Mitsubishi to “minimize the impact,” President Rick Leach said in an e-mailed statement. The St. Louis-based airline agreed in 2009 to purchase 50 Mitsubishi jets with options for 50 more.

“The question now is whether Mitsubishi will hang onto all of its orders,” Chris Murray, an aerospace analyst at PI Financial Corp., said in a telephone interview from Toronto. “Theoretically, at least, the delay opens up opportunities for Bombardier and Embraer.”

Mitsubishi Heavy rose 2.4 percent to 560 yen as of 11:15 a.m. in Tokyo trading, helping the stock advance 35 percent this year. Bombardier rose 2.8 percent to C$4.70 in Toronto yesterday, while Embraer slid 0.4 percent to 20.17 reais.

Mitsubishi Aircraft, 10 percent owned by Toyota Motor Corp. (7203), has orders for 325 planes, according to yesterday’s statement. Of that, 165 are firm and the remainder are options. Other customers include Japan’s ANA Holdings Inc. and Indonesia-focused lessor ANI Group Holdings Ltd.

Dreamliner, A380 Delays

The planemaker cited delays in certification as the reason for the latest postponement.

Delays for new aircraft are common in the industry. Boeing Co. (BA) and Airbus SAS, both with years of experience building large, complicated jets, have had to push back introductions.

The 787 Dreamliner, Boeing’s most advanced jet, entered commercial service at the end of 2011 after 3 1/2 years of delays. ANA was the launch customer for that plane.

Airbus A380, the double-decker plane, began commercial flights with Singapore Airlines Ltd. (SIA) in 2007 after more than two years of delays and cost overruns.

Commercial Aircraft Corp. of China is said to delay the maiden test flight of the country’s first large passenger plane to 2015 from an earlier plan for next year, four company officials familiar with the plan said earlier this month.

Mitsubishi’s jet is designed to fly as far as 3,410 kilometers (2,119 miles), enough to reach anywhere in the mainland U.S. from Chicago. The company forecasts global demand for 5,000 regional jets over the 20 years to 2030.

To contact the reporters on this story: Leslie Picker in New York at lpicker2@bloomberg.net; Frederic Tomesco in Montreal at tomesco@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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