May 23, 2020 / 4:15 AM / 6 days ago

Japan's SpaceJet maker closes overseas sites, mulls cuts at home amid coronavirus squeeze

(Reuters) - SpaceJet regional aircraft maker, Mitsubishi Aircraft, said it is closing overseas operations that employ hundreds of people and may cut staff at home after its parent company slashed the development budget for Japan’s first commercial aircraft in a century.

The move, which comes as the coronavirus pandemic wreaks havoc on the aviation industry, casts doubt over the future of Japan’s commercial aircraft ambitions and will at the very least delay certification of Mitsubishi’s first plane, the M90.

Mitsubishi Aircraft has already shelved plans for a shorter variant, the M100, seen as key to winning orders in the lucrative U.S. market.

“The company has had to make difficult decisions that will significantly reduce its global activities and will have a major impact on its entire organisation,” a spokesman told Reuters. “We do anticipate a reduction to our organisation in Japan, but is not entirely clear yet,” he added.

Closures will include offices in Washington State and Montreal, Canada, with Mitsubishi Aircraft keeping a small team of engineers to carry out aircraft maintenance at its test site in Moses Lake, a three hour drive from Seattle, the company said.

The aircraft maker’s parent, Mitsubishi Heavy Industries’ (7011.T) (MHI) cut the aircraft unit’s budget this year by more than half to 60 billion yen ($558 million) due to the coronavirus downturn.

This is the latest and most serious setback yet for an aircraft programme that has already been delayed six times. The first Mitsubishi regional jet was supposed to go into operation in 2013, but will not be delivered to launch customer ANA Holdings (9202.T) until after March next year.

MHI, which is purchasing Bombardier Inc’s (BBDb.TO) regional jet business, has so far remained committed to a project that Japan’s government has promoted as a once in a generation chance for the country to establish itself as a commercial passenger jet maker.

In the year ended March 31, MHI reported a 29.3 billion yen operating loss after swallowing a 263 billion yen charge from Mitsubishi Aircraft.

Reporting by Tim Kelly, Maki Shiraki and Kanishka Singh; Editing by

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