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MarketScreener Homepage  >  Equities  >  TAIWAN STOCK EXCHANGE  >  MiTAC Holdings Corp    3706   TW0003706008

MITAC HOLDINGS CORP

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Mitsubishis MRJ70 Destined for Makeover as SpaceJet M100

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06/15/2019 | 06:58am EDT

Mitsubishi Aircraft (Mitac) expects to detail plans for significant changes to the smaller of its two regional jets under development during this Paris Air Show as part of an effort to better satisfy scope clause-restrained airlines in the U.S.

Speaking last month after a ceremony marking the opening of Mitacs U.S. headquarters in Renton, Washington, Mitac chief development officer Alex Bellamy explained that the airplane formerly known as the MRJ70a designation the company retired in favor of the newly named SpaceJet M100will need to carry 76 seats in a three-class configuration while retaining the MRJ70s ability to meet the 86,000-pound maximum takeoff weight limitations in the scope clauses written into the pilot union labor contracts at the three U.S. major airlines. Bellamy, whose role with Mitac recently shifted from MRJ program head to chief development officer, would offer no further details of the plan other than to say the airplane would retain commonality with the former MRJ90, now known as the SpaceJet M90. The company expects certification and entry into service of that model by the middle of next year and the official launch of the SpaceJet M100 by year-end.

[Seating configuration is] possibly one change, but we have a refresh and a restatement over all of the product to bring it up to the latest technology, explained Bellamy, who added that the MRJ70 revamp would involve fundamentally no change to the airframe.

Mitsubishi considers the U.S. by far the biggest market for the SpaceJet, and when development began more than a decade ago most company executives expected scope clauses at the major airlines to relax enough to allow operation of the MRJ90 at their regional affiliates. Market conditions and the appetite by mainline airline executives to confront their pilot groups over the issues have changed, however, and Mitsubishis customers have clearly indicated they dont plan to further push for concessions by the time contract-amendable dates usher in the start of the next round of collective bargaining, soon after the turn of the decade.

What we've been working on is I think fundamentally improved over what the MRJ70 was, said Bellamy. The MRJ70 was a product in a market which was different years before. And where we sit today is a market where scope isn't going to change, not for the foreseeable future or not for the predictable future anyway.

Of course, the MRJs main competitors for U.S. salesEmbraer and Bombardierface the same constraints. For Embraer, that means its new 76-seat E175-E2, whose mtow also exceeds the 86,000-pound limit, cannot fly with the regional affiliates of the three major U.S. airlines either. Bombardier, meanwhile, signaled its intention to exit the airliner business altogether following its confirmation early this month that it has entered talks to sell the CRJ program to Mitsubishi Heavy Industries.

While Mitsubishi's interest in the CRJ clearly centers on Bombardier's support infrastructure, the Canadian company wants to sell the entire program, including production, fully intact. So as Mitsubishi appears left with little choice but to assume control of the CRJ production line as a condition of any deal, the Japanese company sees the shrinking backlog of the Bombardier regional jet as another sign of the markets lack of appetite for anything less than a new-generation airplane powered by new engines. Embraer, whose original E175 has dominated 76-seat sales in the U.S. over the past decade, would disagree given that airplanes relatively healthy backlog and incumbency advantages. Nevertheless, Bellamy called the SpaceJet family very well positioned to be the only next-generation regional aircraft in the marketplace.

We see that one of our competitors is signaling that they wish to exit the market space entirely and the other one is going to be focused on other market sectors too, said Bellamy. So they're not just going to be in the regional regional sector as it's traditionally defined. Some 90 percent of airports today have a regional jet in them. Sixty-three percent of airports in the U.S. only have a regional jet in them. Nearly 50 percent of aircraft flying today in the United States are regional jets. So this is not a shrinking market. This is a very sizeable market.

Outside the U.S., the baseline 92-seat M90 appears destined for airlines unencumbered by scope clauses, such as launch customer All Nippon Airways and Japan Airlines. Following no fewer than five major delays, that program in the past year has gained momentum, and in late March received a letter of authorization (LOA) allowing a team from the U.S. Federal Aviation Administration to fly aboard the four flight test airplanes in support of certification activities with the Japan Civil Aviation Board (JCAB). That approval followed some three months after type inspection authorization from the JCAB, marking the start of certification test flying.

FLIGHT-TEST PROGRESS

Now having flown more than 2,600 hours, mainly from Mitsubishis flight test center in Moses Lake, Washington, the four M90 prototypes will conduct roughly 80 percent of all the flight testing for that program. The first of another two flight test airplanes to join the program will fly very shortly said Bellamy. Plans call for those airplanes to conduct items such as environmental control system, hot and cold climate, high-intensity radiated field (HIRF), and lightning testing.

Bellamy explained that all four of the airplanes at Moses Lake have either undergone or remain in the process of undergoing upgrades to the latest design configuration, allowing the company to perform TIA testing on flight test aircraft (FTA) 4, for example. Mitsubishi calls FTA-4 the mega-mod for obvious reasons; it incorporates most of the configuration changes and modification work necessitated by the fifth program delay in early 2017, when certification authorities determined that the placement of certain components and wiring harnesses in the avionics bay did not properly account for extreme situations such as water leakage or an explosion in the area.

Although Bellamy couldnt recite a precise percentage of program deliverables the SpaceJet team has executed, he expressed satisfaction with its performance since the most recent program setback.

I dont have a number in my head, said Bellamy. What I do know is we talk about every five minutes...You need to get the deliverables up the curve and getting deliverables up the curve is a function of suppliers doing what they need to do and giving it to you to then pass on and its a function of doing flight testing, rig testing, and then writing a report and passing it on. We set our own internal goals for the number of deliverables that we wish to deliver. I really am pleased with where we are actually exceeding that.

(c) 2019 Saudi Voters Center Provided by SyndiGate Media Inc. (Syndigate.info)., source Middle East & North African Newspapers

Stocks mentioned in the article
ChangeLast1st jan.
BOMBARDIER, INC. -1.89% 2.08 Delayed Quote.8.37%
EMBRAER 0.36% 19.33 End-of-day quote.-10.98%
MITAC HOLDINGS CORP End-of-day quote.
MITSUBISHI HEAVY INDUSTRIES LTD 0.45% 4640 End-of-day quote.20.27%
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