Business

Mitsubishi and Mesa to explore potential 100-plane SpaceJet deal

Bloomberg/kyodo

Mitsubishi Aircraft Corp. saw a boost this week to sales of its long-delayed SpaceJet regional aircraft, as Mesa Air Group Inc. signed a pact to negotiate a potential 100-plane deal.

The memorandum of understanding, signed Thursday, calls for Mitsubishi and Mesa to discuss terms for a firm order of 50 SpaceJet M100 planes with purchase options for 50 more. Deliveries would begin in 2024, the companies said in a statement from a regional airline conference in Nashville, Tennessee.

The possible order by Phoenix-based Mesa would give the SpaceJet a bigger toehold in the U.S. market. In June, Mitsubishi renamed the aircraft and said deliveries would begin in 2020.

The unit of Mitsubishi Heavy Industries Ltd. said deliveries to Mesa of the SpaceJet M100, which is capable of accommodating around 70 passengers, would start in 2024. The contract is said to be worth around ¥400 billion ($3.74 billion).

Mitsubishi Aircraft has received around 400 SpaceJet orders so far since the project started, but has seen no new orders since 2016 due to repeated delays in the company’s planned delivery date. The delays have been the result of design modifications, intended to cater to high demand for jets with about 70 seats in the major North American market.

The plane, originally called the Mitsubishi Regional Jet, was renamed in June, and the developer also reviewed the design of the SpaceJet M100 to allow a more flexible seat configuration and more personal space for passengers.

Mitsubishi Aircraft said it is also currently negotiating with another North American client to sell 15 of its SpaceJet M100. Its other model is the SpaceJet M90, which can seat about 90 passengers.

The SpaceJet M100 is small enough to comply with “scope clause” language in most U.S. pilot contracts, which limit the size of aircraft that regional airlines can fly for large carriers. Mesa flies 145 regional jets for American Airlines Group Inc. and United Airlines Holdings Inc.

Mitsubishi Aircraft, part of Mitsubishi Heavy Industries Ltd., has suffered multiple delays in its $2 billion development of the aircraft as it reworked major aspects to reduce weight. Delivery to launch customer ANA Holdings Inc. has been delayed several times and is now expected next year.

Mesa is likely considering the purchase of SpaceJets as Canadian aircraft manufacturer Bombardier Inc. will end production of the jets it uses next year.

Mitsubishi says the aircraft will burn 20 percent less fuel per trip than current regional jets of the same size due to newer geared turbofan engines from Pratt & Whitney, a division of United Technologies Corp. In June, Mitsubishi agreed to acquire Bombardier Inc.’s CRJ regional jet program for $550 million and about $200 million in liabilities.