The news was expected.  But even so, it is frustrating to read the following from MITAC: “Mitsubishi Heavy Industries, Ltd. (MHI) announced today that MHI and Mitsubishi Aircraft Corporation will adjust the of the Mitsubishi Regional Jet (MRJ) from mid-2018 to mid-2020.  The change is due to revisions of certain systems and electrical configurations on the aircraft to meet the latest requirements for certification.”

The aircraft was meant to enter service in 2014.  These delays are troubling to say the least.  Reports suggest that technical issues with the positioning of the aircraft’s electronics forced a design review. The MRJ90’s type certification is delayed to the fall 2019.

Program delays are not unusual – they happen at the biggest and best OEMs.  But for MITAC the news must be a big undermining of customer confidence.  For example launch customer ANA will retain its 737-500s and that means associated MRO costs. Even if MITAC picks up these costs, ANA planners must be getting annoyed.  At JAL, the pressure is less as their deliveries are set for 2021.  But how confident can they feel now? They clearly wanted to see the aircraft in service with others before taking deliveries.  There won’t be much customer history before those deliveries take place now – assuming no further delays.

If there is one aspect of this delay with a positive, it is that will be revisiting scope clauses in 2019. This may be to the advantage for big customers like SkyWest and Trans States.  But how happy can they be with these ongoing delays?  Their confidence is surely wearing thin.  The FT has interesting quotes from the CEO at parent Mitsubishi Heavy.  The project appears in some disarray.

Here are the active fleets of the two key key US customers for the MRJ90 as of 3Q16.  Between them they account for over 70% of MRJ90 orders.  We can see why they want to get newer aircraft.  But absent an MRJ90, it would seem that these two customers are probably making calls to San Jose dos Campos and Montreal this week. They need to manage their business risk.

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