Mitsubishi Heavy Industries Ltd.’s aircraft unit is set to reap the benefits of a weakening yen after securing more than $4 billion of contracts for a new jet when the currency was near a record high against the dollar.
Mitsubishi Aircraft Corp., which is making Japan’s first regional passenger jet, pays for about 60 percent of the plane’s materials and other costs in dollars, Chief Executive Officer Hideo Egawa said in an interview in Tokyo on March 8. The planes are sold in dollars and profit is booked in yen.
The aircraft maker won an order for 200 planes including options, worth $8.4 billion at list prices last year from U.S. commuter carrier SkyWest Inc. The yen touched a record high at 75.35 to the dollar in October 2011. The yen has slid since Prime Minister’s Shinzo Abe’s party won the elections last year as he pledged to work with the Bank of Japan to end 15 years of deflation.
“We’re delighted with a weaker yen. We welcome it with open arms,” said Egawa. “We’d like the yen to get even cheaper.”
The yen traded at 96.18 to the dollar as of 1:18 p.m. in Tokyo. The Japanese currency has slid 21 percent from 79.76 yen since Mitsubishi Aircraft announced its SkyWest order.
Mitsubishi Heavy shares rose 0.4 percent to 546 yen in Tokyo trading today. They have gained 32 percent this year, compared with a 19 percent gain in the Nikkei 225 Stock Average.
The aircraft maker has won 325 orders, including options, for the plane, topping the company’s goal of up to 250 planes before the Mitsubishi Regional Jet’s first flight, set for as early as October, Egawa said. The carrier is outselling rival Bombardier Inc., which had secured 148 orders for its new passenger jets by the end of December.
“When the yen was around 80 to the dollar we were constantly looking for ways to cut costs,” said Egawa. “When we convert our orders into yen it definitely gives us an edge.”
The planes both use variations of an engine being developed by United Technologies Corp.’s Pratt & Whitney that will help the planes cut 20 percent in fuel consumption.
The Nagoya, Japan-based company, is on target for the first flight of the plane, which it began assembling in April 2011, by the end of this year, Egawa said. The planemaker plans its first delivery of the plane in the year ending March 31, 2016.
Mitsubishi Aircraft is building 78- and 92-seater versions of the MRJ to compete with planes from Bombardier and Empresa Brasileira de Aeronautica SA as it forecasts global demand for 5,000 similar-sized aircraft over the 20 years to 2030.