Mitsubishi delays MRJ, more trouble for smaller aircraft manufacturers - and All Nippon Airways

Mitsubishi announced the first flight of its 92-seat MRJ90 will be delayed from 4Q2011 to 2Q2012. In an effort to shorten the testing and certification period, the number of flight test aircraft will be increased from four to five. Delivery to launch customer, All Nippon Airways, would be postponed from 2013 to 1Q2014. ANA is already suffering badly from the nearly 30-month delay to the B787.

The delay to the MRJ is due to significant design modifications to the aircraft's cabin and wing structure, reducing the amount of carbon fibre composites used in the aircraft from over 50% (covering the wings and fuselage barrels) to 10-15% of the airframe (by weight).

Heavy metal

Japan is the world's largest manufacturer of carbon fibre, but soaring levels of demand have pushed up prices and put increasing amounts of pressure on production. Mitsubishi found that use of carbon composites has not reduced the aircraft weight as much as expected, and employment will now be limited to empennage, and the tail structure. Mitsubishi will revert to aluminium for the wing structure. Mitsubishi Heavy Industries already manufactures the carbon fibre wings for the B787 aircraft, which recently suffered another six-month delay, due to a wing to side of body join stress problem revealed during ground testing.

Along with the reversion to aluminum, the structural changes to the MRJ will allow Mitsubishi to produce a 100-plus seat model, as well as enlarge the diameter of the fuselage by 4-7 cm. The MRJ currently has just 25 orders, all from ANA for the larger MRJ90, and feedback from potential European and US customers has indicated a preference for a higher capacity aircraft. The launch of the larger model is still "subject to demand and business case", but makes sense, given the shift to larger regional aircraft witnessed over the past few years.

A 100-110 seat model would put the MRJ into direct competition with offerings from Bombardier and Embraer, namely the E190/195 family and the currently undergoing certification CRJ-1000. But it may be too little, too late for the aircraft, which is facing a highly competitive regional jet market.

Sukhoi is offering its new 75 to 95-seat SSJ-100, which has also suffered its share of delays and is due to commence commercial operations in 2010, following the completion of certification. The aircraft already has more than 140 firm orders, all in Europe and all for the larger 95-seat version. Bombardier's upcoming CSeries, due to launch around 2013-2014, offers between 100 and 149 seats, and already has 50 firm orders. Embraer has announced in recent months that it is considering a new narrowbody aircraft, potentially of a similar size to the CSeries.

Making matters worse, the regional aircraft market has been most deeply affected by the global financial crisis. Embraer, Bombardier and ATR secured just over 100 net orders for regional jets and turboprops between them in 1H2009, losing out heavily due to bankruptcies of smaller operators and order cancellations. Order backlogs are slowly diminishing, even though manufacturers have slowed deliveries.

The outlook for recovery is mixed, but Bombardier, at least, is confident that traffic will recover from next year. The company's VP for Sales in the Asia Pacific region, Trung Ngo, commented yesterday the decline in airline passenger traffic has now bottomed out and forecast a resumption of "modest growth" However, there is expected to be a lag between the recovery and the return of aircraft ordering. Manufacturers will need to wait for airline profitability to return before aircraft sales rebound.