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MHI jet wins U.S. backing from SkyWest, Trans States

Bloomberg

Mitsubishi Heavy Industries Ltd.’s new regional jet, Japan’s first such aircraft, won fresh support from U.S. commuter carriers SkyWest Inc. and Trans States Holdings even as its debut was delayed by more than a year.

SkyWest and Trans States said Thursday they are in talks about a new timetable with MHI’s aviation unit, Mitsubishi Aircraft Corp., after the Nagoya-based plane maker pushed back deliveries of the 78- and 92-seat models until the second quarter of 2017 from March 2016.

The postponement adds to MHI’s struggles as it tries to challenge regional jet builders Bombardier Inc. and Embraer SA. It is at least the second delay after the company said in April 2012 that the first flight would be late as it confirmed fabrication processes and completed technical studies.

“There will be some slight modification to deliveries,” SkyWest Chief Financial Officer Michael Kraupp said from the company’s headquarters in St. George, Utah. “We’re working those out, as we speak, with Mitsubishi. But in general, it doesn’t change our strategy and the need for the aircraft.”

SkyWest, a partner of United Airlines, committed a year ago to 100 of the MHI planes, valued at $4.2 billion. Montreal-based Bombardier, the maker of the CRJ900 and CRJ1000 regional jets, historically had supplied aircraft to SkyWest.

Trans States is “very disappointed” by the delay while continuing to work closely with MHI to “minimize the impact,” President Rick Leach said in a statement. The St. Louis-based airline agreed in 2009 to purchase 50 MRJ’s with options for 50 more.

“The question now is whether MHI will hang onto all of its orders,” Chris Murray, an aerospace analyst at PI Financial Corp., said in Toronto. “Theoretically, at least, the delay opens up opportunities for Bombardier and Embraer.”

Mitsubishi Aircraft, 10 percent owned by Toyota Motor Corp., has orders for 325 planes, according to Thursday’s statement. Of that, 165 are firm and the remainder are options. Other customers include ANA Holdings Inc. and Indonesia-focused lessor ANI Group Holdings Ltd.

The plane maker cited delays in certification as the reason for the latest postponement.

Delays for new aircraft are common in the industry.

The 787 Dreamliner, Boeing’s most advanced jet, entered commercial service at the end of 2011 after a 3½-year delay. ANA was the launch customer for that plane. The double-decker Airbus A380 began commercial flights with Singapore Airlines Ltd. in 2007 after more than two years of delays and cost overruns.

MHI’s jet is designed to fly as far as 3,410 km, enough to reach anywhere in the mainland U.S. from Chicago. The company forecasts global demand for 5,000 regional jets until 2030.