Mitsubishi Heavy Industries (MHI) confirmed on Tuesday that it will discontinue the SpaceJet program, a day after stating that media reports were unfounded. The Japanese industrial giant admits that it has underestimated the complexity of the type certification process for a commercial aircraft, but will apply lessons learned to future aviation and aerospace companies. Mitsubishi admits it underestimated the MRJ/SpaceJet program.
The writing of the SpaceJet future was on the wall, ever since Mitsubishi paused the project in May 2020. Although it said in 2021 and again in 2022 that a restart was still under evaluation, the accountants took a different view as all assets and costs for the program were impaired in the 2022 financial statements.
In today’s FY22 presentation, MHI cited four reasons why it has stopped SpaceJet and why the project “failed to confirm sufficient business viability for resuming development.” The first is that the aircraft would require partial revisions and additional decarbonization solutions, both related to the fact that the development of the aircraft has taken so long. MHI launched the Mitsubishi Regional Jet (MRJ) in 2007 and flew the first test aircraft in November 2015, but technology has advanced since then.
The second reason is that Mitsubishi failed to get support from global partners to develop the aircraft, something that was part of its three-fold strategy when it launched the MRJ. The Japanese wished to develop strong partnerships with others so that their industry would be able to develop products and services and give Mitsubishi a global presence. Mitsubishi Aircraft Corporation, the subsidiary dedicated to the program, only secured partnerships with the “usual suspects” like hardware and software suppliers for avionics, equipment, and engines. The MRJ was the launch project for the Pratt & Whitney Geared Turbofan with the PW1200G variant.
The third reason mentioned by Mitsubishi for stopping the project is the most crucial one: the lack of progress on scope clause in the US. For years, Mitsubishi remained optimistic that a solution would be found for the rift between airlines and unions about the clause, which prevents regional airlines from operating aircraft heavier than 39.010 kilograms by regional airline pilots. But it didn’t happen.
The MRJ90, rebranded SpaceJet M90 in 2019, failed to meet Scope Clause and the market requirements of the crucial North American market. With that, the orders for 100 plus 100 options from SkyWest were always in doubt. Trans States Airlines canceled its order for fifty aircraft plus fifty options in 2019 and so did Aerolease Aviation in 2021 with its order for ten plus ten options.
Mitsubishi unveiled the M100 70-seater in Paris 2019. (Mitsubishi Aircraft Corporation)
Even the unveiling of the updated and smaller 76-seat SpaceJet M100 at the 2019 Paris Airshow didn’t change the fortunes of MHI. An order for fifty plus fifty options from Mesa Airlines in September 2019 was the only one for the seventy-seater. It didn’t prevent Mitsubishi’s top management from pausing the project some six months later.
The Japanese company says that extensive funding would be required to continue type certification acquisition. Without a solid business case, it is unwilling to commit to this for a program that has lost its appetite with customers long ago. All Nippon Airways remained loyal to Mitsubishi all those years and said it would be dully waiting for the first delivery, even after seven program delays. The airline had only fifteen M90s on firm order plus ten options, so it can do without them. If ANA requires a regional jet in the first place now remains to be seen. The same applies to Japan Airlines, which had orders for 32 M90s.
During the earnings call, Chief Financial Officer Hisato Kozawa said that options to continue the program had been evaluated: “Although discontinuation was always an option, over the past two years, we considered a variety of possibilities, including cooperation with other companies. However, considering the current market environment, development progress, and the additional investments required to launch the business, we determined we did not have the option of working with another company and that the business was not expected to be viable, which led us to decide to discontinue the project. We had spent a sizeable amount of money on the development, so we were trying to find a way to make it work.”
In ‘lessons learned’, Mitsubishi says today that “insufficient initial understanding of highly complex type certification process for commercial aircraft” and “insufficient resources to continue long-term development” is what it has learned from MRJ/SpaceJet.
Short-term, the company says that the focus is on continuing its business with the Bombardier CRJ program, which it took over and is run now as the Mitsubishi CRJ by Mitsubishi Heavy Industries Regional Jets (MHIRJ) in Canada. “We plan to continue this business, which still expects to see growth. There are currently over 1,000 CRJs in operation, and we want to increase the market share of our CRJ maintenance business going forward. Also, market ratings of our maintenance services are high, and we would like to obtain maintenance work for other OEMs’ aircraft as well”, Kozawa said.
Medium-term, this includes options to modify the CRJ for the use of hydrogen-electric propulsion in partnership with ZeroAvia. The two companies strengthened their partnership last year and through United and American Airlines have found investors that want to use the technology on converted aircraft.
The MRJ90 got plenty of media attention at the 2017 Paris Airshow. (Richard Schuurman)
Longer term, Mitsubishi will consider if it wants to get involved in next-generation technologies for aircraft development programs. If this means starting from scratch with a new project seems most unlikely, as MHI says at the same time that it wants to deepen partnerships with global OEMs. As CFO Hisato Kozawa said: “The main focus of this initiative is not on OEM aircraft manufacture, but rather on next-generation technologies. We would like to develop technologies that could become central to aviation if SAF or electrification were to receive real-world implementation. I think the second item, “Deepen partnerships with global OEMs,” is a point that everyone is concerned about, but please understand that this does not refer to joint development with global OEMs. To date, the Aero Structures business has basically served to manufacture parts according to technical drawings designed by OEMs such as Boeing. Our SpaceJet development work was highly regarded internationally, so we are hoping to expand the involvement of our Commercial Aviation business to include participation from the design phase, not limiting ourselves to simply following the customers’ technical drawings.”
And MHI wants to apply the knowledge and experience to the F-X or F-3 sixth generation, stealth fighter jet that it is developing for the Japan Air Self-Defence Force This program has now become a joint effort between Japan, the UK, and Italy as the Global Combat Aircraft Programme, with MHI the prime contractor.
Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
Richard is contributing to AirInsight since December 2018. He also writes for Airliner World, Aviation News, Piloot & Vliegtuig, and Luchtvaartnieuws Magazine. Twitter: @rschuur_aero.