Mitsubishi Cuts Metal for MRJ as Sales Sag

 - October 8, 2010, 6:22 AM

Mitsubishi has tried not to let lackluster sales tarnish an efficiently run development campaign for the MRJ regional jet, the first metal for which workers cut during a ceremony in Nagoya, Japan, last week. As promised, the program passed its detailed design reviews by the end of the summer. The company has frozen the final configuration of the 88-seat MRJ90 and reached conclusions about the changes needed for the 76-seat MRJ70 and the still unlaunched 100-seat MRJ100X. Project partners have now started manufacturing various components for which they carry responsibility, and Mitsubishi Heavy Industries–the company responsible for the MRJ’s fuselage, wing and empennage, along with final assembly and equipment installation–has fabricated the first aluminum joint rib for the airplane’s horizontal stabilizer.

Meanwhile, BAE Systems has signed a new multi-year agreement with Mitsubishi Aircraft under which it will initially provide engineering development and integration services related to flight-test equipment and systems for the Pratt & Whitney PW1000G-powered aircraft. The new contract builds upon an existing contract under which a team from BAE Systems’ Regional Aircraft business at Prestwick, Scotland, supports engineering on a number of work packages, including the powerplant, pylon, nacelle, auxiliary power units and fuel systems.

But while all indications seem to point to a methodical, well-run industrial effort, the MRJ’s sales team has failed to secure a firm order apart from the initial launch contract with All Nippon Airways for 15 airplanes. The so-called U.S. launch customer, St. Louis-based Trans States Airlines, signed a letter of intent covering an order for 50 of the 78- to 92-seat airplanes and options on another 50, but more than a year later, Trans States has failed to commit to a firm order.

Granted, Mitsubishi has time to build a more respectable backlog before the airplane enters service with ANA in early 2014, but questions remain about the market the manufacturer hopes to cultivate with the MRJ. Although Brazil’s Embraer enjoyed something of a sales revival during the Farnborough airshow, overall, recent order activity suggests a withering market for regional jets in the 70- to 80-seat range, particularly in the U.S. Even the 90- to 100-seat segment has seen a lull, as opportunities to place airplanes with major airlines appear to have diminished and pilot union scope clauses continue to restrict their use at regional airlines.

Meanwhile, as highlighted in a new study released this week by Newtown, Conn.-based Forecast International, the regional airline industry itself finds itself in a state of flux. The 2008-2009 airline market slump hit regionals particularly hard, it said, and the recovery now under way could easily stall, should the general economy remain sluggish or drop back into recession. In addition, many mainline network airlines want to alter, or even scrap altogether, the fixed-fee-per-departure arrangements that have traditionally defined major/regional partnerships.

All the uncertainty appears not to bode well for the near-term sales prospects of Mitsubishi and a crowded field of competitors in the 70- to 90-seat market. Fortunately for Mitsubishi, while the future of that segment appears to stand on some shifting fundamentals, it has time to wait out the tremors.