Mitsubishi Heavy Industries Ltd. said on Monday it will halve the budget for its problematic passenger jet project to ¥60 billion for the year ending next March.
The decision on the midsize SpaceJet comes as the company's bottom line takes a beating from the coronavirus pandemic.
"We will proceed with the project at an appropriate scale while taking into account the difficult circumstances the group faces," Mitsubishi Heavy President and Chief Executive Officer Seiji Izumisawa told an online news conference.
MHI also said that development work for the 70-seat version of the SpaceJet, designed for the U.S. market, will be suspended until further notice.
Plans for the 70-seater will be reconsidered during the suspension, Izumisawa said. The most recent timeline for delivery was set around calendar 2023.
Izumisawa did not give an update on plans to deliver the first 90-seat version of the SpaceJet, which was delayed until the fiscal year starting April 2021.
The final prototype for the 90-seater was just completed in January after a long delay. It was scheduled to be transported to the United States this spring for test flights, but the company has not been able to do so because of the pandemic.
For the year ended March, Mitsubishi Heavy booked a consolidated operating loss for the first time in 20 years after taking a ¥263.3 billion loss related to the SpaceJet project.
It posted an operating loss of ¥29.54 billion after posting a profit of ¥200.57 billion the previous year. It expects to break even for the year ending March 2021, predicting the pandemic will help reduce operating profit by ¥140 billion.