Mitsubishi Heavy Industries Ltd. is considering sharply scaling back its staff and budget for developing the first domestically manufactured passenger jet, effectively freezing the operation amid a slump in demand caused by the novel coronavirus pandemic, sources close to the matter said Thursday.

The Japanese firm's subsidiary Mitsubishi Aircraft Corp. has been developing a small aircraft called the Mitsubishi SpaceJet, previously known as the Mitsubishi Regional Jet. Its initial delivery to All Nippon Airways Co., originally planned for 2013, has been postponed to 2021, or possibly later, due to problems with parts and a lack of technical expertise.

The new passenger jet, if successfully launched, would be the first commercial aircraft manufactured in Japan in half a century following the YS-11 turboprop plane by Nihon Aircraft Manufacturing Corp., a public-private company.