Mitsubishi Aircraft to Downsize Workforce by Half

Mitsubishi Aircraft Corp. may lay off more than half of its 2,000-strong employees after the deadly COVID-19 virus ravaged travel demand and delays continue to plague its regional jet project.

“The company will cut more than half of its workforce in its restructuring move. The aircraft-making subsidiary of Mitsubishi Heavy Industries Ltd (MHI). will also close its U.S. headquarters, a development center in Canada and sales offices in the United States and Europe,” a source close to the matter told Kyodo on Saturday.

A Mitsubishi testing site in Washington will be spared, while its workforce will be drastically reduced.

The company will also reshuffle its development team, with Chief Development Officer Alex Bellamy stepping down and Yasuhiko Kawaguchi, who has experience at the U.S. test site, taking the lead in aircraft development as chief engineer, starting July 1.

Earlier this month, MHI acquired Bombardier Canadair Regional Jet (CRJ) Series for $550 million and launched MHI RJ Aviation Group regional jet service and support unit.

The Japanese company planned to widen business by building SpaceJet, a small regional jet. It will be the country’s first home-grown passenger jet. But in May, MHI said it will halve the budget for its SpaceJet project to ¥60 billion for the year ending next March. The final prototype for the 90-seater was just completed this January. The plane was to be flown to the United States for test flights, but the COVID-19 virus caused a setback.

In its “FY2019 Financial Results & Emergency Measures, Strategy Update” report published on May 11, it Mitsubishi predicted delivery of the first midsize plane to be pushed by a year or more.

When the project was launched several years ago, the company expected first SpaceJet delivery for 2013. Changes in design, review of the manufacturing process and a delay in parts delivery pushed the delivery date to mid-2020.

“Profit from business activities declined significantly, resulting in a loss of ¥29.5 billion (down ¥216.2 billion YoY), mainly due to the loss in our SpaceJet business. Delivery of the first SpaceJet plane will be delayed until FY2021 or later,” MHI said in its report.

In addition, the company noted that the development work of a 70-seat SpaceJet, designed for the U.S. market will be suspended until further notice. The delivery of the jet was set to start around calendar 2023.