Leeham News and Analysis
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Leeham News and Analysis
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The long, slow death of Mitsubishi’s SpaceJet
By Scott Hamilton
The Mitsubishi MRJ90, rebranded the SpaceJet, was to be replaced by the M100. The M100 was Scope Clause compliant and certifiable, unlike the poorly conceived MRJ90. Credit: Leeham News.
Feb. 9, 2023, © Leeham News: Mitsubishi Heavy Industry’s (MHI) announcement this week that it finally killed the SpaceJet program is hardly new. This was apparent as far back as January 2020 when all the Canadian and American leadership at Mitsubishi Aircraft Corp (MITAC) was unceremoniously booted out. Then, in May 2020, using the COVID pandemic as an excuse, all US operations were closed; so was the recently opened Canadian engineering center; the budget was reduced by 95%; and nearly all the engineers at the home office in Nagoya, Japan, were laid off or reassigned.
MHI refused to state the obvious. Instead, officials said repeatedly that the program was “paused.” This drip, drip, drip was all about saving face. Thus, the slide in MHI’s presentation about why the program was finally being killed was more candid than expected.
Ignores M100, focuses on MRJ90
MHI’s slide detailing why it terminated the SpaceJet program focused on the MRJ90 and ignored the redesigned, certifiable model, the M100 SpaceJet.
The references in the slide are accurate—as far as they go. The MRJ90 was uncertifiable as designed, due to inexperience by MITAC’s staff. They didn’t have the knowledge to undertake a full airplane program with all the integration, regulatory and certification requirements required. This led to the need to alter certain crucial designs of the MRJ90. Even so, the aircraft remained outside the US labor contract Scope Clause requirements related to weight; the MRJ90 was too heavy.
The insurmountable problems with MRJ90 led to repeated delays and billions of dollars in cost overruns. The Western team recruited to save the program came from Bombardier, Embraer and Boeing. They recognized the MRJ90 was unsavable and wanted to discontinue development of the MRJ90 in favor of redesigning the smaller MRJ70. This airplane had not only the same fundamental design shortcomings as the larger MRJ90. It also was designed to carry too few passengers, which made it uncompetitive with the Embraer E175-E2 and the legacy E175-E1.
Redesigns of the MRJ70 added passengers, shaved weight and updated the interior. LNA’s analysis of the redesign concluded that the airplane had a double-digit advantage vs the E1 and single-digit vs the E2.
Acquiring the CRJ program
One major consideration as the Western executives worked to save the program identified was the need for a global support system for their regional jet. Creating one from scratch would be an immense task. Talent, locations, infrastructure and not the least time and money were obstacles. So MITAC proposed to MHI that Bombardier’s entire CRJ program and its global support system be acquired. The CRJ itself was already a dead duck. Outclassed by the E-Jet and ignored by Bombardier as its focus shifted to the mainline C Series jet, there was a backlog of perhaps two dozen CRJs. Bombardier already planned to end production. MHI agreed to buy the CRJ global support system for eventual transition to the SpaceJet. The remaining orders for the CRJ came with it. The purchase price was about US$550m, with a targeted closing date of June 1, 2020.
Orders and MOUs
The MRJ90 had nearly 200 conditional orders from the USA’s Skywest Airlines and Republic Airways Holdings, plus low double-digit firm orders from Japan’s ANA and a US lessor. The Skywest and Republic orders were conditioned on US pilot contracts being relaxed to accept the heavier airplane. Skywest also had a similar conditional order for 100 E-175-E2s. Because pilot unions were clear they weren’t going to approve adjusting the Scope Clause, none of these conditional orders was firmed up.
But the M100 SpaceJet, as the redesigned MRJ70 was branded, met Scope. MITAC eventually obtained nearly 500 Memorandums of Understanding for the M100 from Mesa Airlines (which was announced) and (unannounced) from major US airlines and European carriers. But these were never firmed up because MHI’s ambivalence was already in the open for all to see.
More money needed
As 2019 came to a close, it was clear to MITAC executives that another US$3.5bn would be needed to finish certification of the M100. A prototype was completed. The executives wanted to discontinue work on the MRJ90 and redirect money, production and engineering resources to the M100. MHI refused to do so, preferring to complete certification of the MRJ90. Insiders said this was a face-saving way to avoid admitting mistakes associated with the MRJ90.
Development for the MRJ90 and now the M100 SpaceJet had cost about US$8.5bn. MHI’s other divisions were losing money for the first time in decades and the new MHI CEO vowed to stem losses.
By January 2020, the Western executives were on their way out. Nobody at MHI publicly acknowledged the true meaning but to outsiders knowledgeable of Japanese culture understood this was the beginning of the end of the SpaceJet program.
Then COVID became a global pandemic in March 2020. By May, MHI closed US operations and a Canadian engineering center opened in September 2019. The budget for the SpaceJet was reduced by 95% and MITAC engineers at the home office in Nagoya, Japan, were let go or reassigned within MHI. The program was dead—but MHI promulgated the fiction that it was merely paused.
MHI wanted to cancel the deal with Bombardier to purchase the CRJ assets, but it was too late. Closing was only weeks away and MHI ultimately went ahead. Upon closing, MHI wrote off the entire purchase price. This cleared the decks for MHI RJ, as the new company was called, to be a profit center supporting the CRJs for years to come. With an eye toward the day when CRJs eventually are retired, a new hangar was built in West Virginia capable of servicing mainline jets.
Stated Reasons to kill SpaceJet
MHI ignored the M100 SpaceJet in its entirety in the slide outlining why the program was discontinued. Nevertheless, the slide is surprisingly candid otherwise.
Setting aside the references to the MRJ90, which was going to be discontinued upon certification of the M100 (some omitted by MHI), all the other data in the slide rings true. Pratt & Whitney and Collins Aerospace, two key suppliers of the MRJ90, were especially reluctant to modify pricing for the M100.
Loss to the industry
The termination of the M100 program is a loss to the commercial aviation industry. It also kills MHI’s once-in-a-lifetime chance to become a global player in a duopoly with Embraer. Airlines like product competition. A larger M130 and a still larger derivate were in MITAC’s plans, eventually providing a family of airplanes. All this is gone.
If there’s someone & Billions who wants to take over the M100 program they need to be fast. The aircraft, assets and people are still around. Soon they’ll be gone.. Worked for the CSeries.
KAI, COMAC, Boeing, Leonardo/Airbus (ATR), SAAB, BAE, TAI, Collins a combination..
Not comparable to Cseries….which was certified , in production and a reasonable order backlog. The Bombardier family newest generation just wanted out of all the various models of their airliner business and they could see there was no free cash flow for some time yet
Mitisubishi – who specialise in Air force military fast jets- had around 10 planes complete and final assembly line – which isnt transferable, like the Montreal factory
It’s odd that Boeing was not interested in the C-series (now A220)
-unless there’s a bigger picture that’s not readily seen, with so much PR-chaff around.
The same applies to the curious demise of the Mitsubishi project. Claims that “AC and Scope issues” stalled and eventually doomed that project do not wash. Go deeper..
My book Air Wars reveals why Boeing passed on buying CSeries
https://www.amazon.com/Air-Wars-Global-Combat-Between/dp/1737640503
I bought and read it.
Neither was Airbus interested initially ( at the price Bombardier wanted!)
But once Comac became involved as a buyer, Trudeau and Quebec went to plan B. ( according to Canadian media) Airbus only got the IP and FAL site at Mirabel for their JV for C$1
The remaining production facilities that Bombardier owned, they had to buy or were sold to others.
The business jet market is going very very nicely for Bombardier , 123 deliveries last year , most for the larger higher profit types. ( Learjet is being closed as no one wanted to buy it)
“The Bombardier family newest generation just wanted out of all the various models of their airliner business and they could see there was no free cash flow for some time yet.”
Rewriting history?? Thanks to unfounded “dumping” claim by youknowwho.
Nope. Its well documented that Airbus has had to put bucket loads of money into the production of existing planes. The existing models came fully formed on a plate for them.
Very good planes but its the well understood cash flow curve for a new model ( from any manufacturer) doesnt get into positive territory till well into production. It wasnt *dumping* as ALL their Cseries planes were sold under production cost, even in home market Canada.
They dont explain that in the news feed headlines thats your only source of info
I worked on this program on the flight test side for the last 2.5 years of its active life. Unfortunately, there is no evidence that Mitsubishi learned the most important lesson from this exercise. The missed lesson is that the Japanese culture of perfection is not compatible with making a profit as a civil aircraft manufacturer. It is never possible to have enough time and data to make the absolutely perfect decision on every design change. Instead, good enough decisions must be made quickly, to keep the development program moving ahead.
I’d wondered whether this and also the culture of deference had been issues. So, interesting to read your take.
FWIW, I think the perfection could possibly work if they’d got it to a decent stage of maturity but would struggle up to that point. The long duration of development and size of workforce inherent in an airliner being the big obstacles.
Placeholder.
Cutting Mitsubishi a little slack, I don’t think they were the only ones who thought the pilots’ union would be so utterly unmovable about scope.
Indeed, that miscalculation has also cost Embraer dearly. Hind sight is 20/20 but those multi-billion dollar bets on the whims of union politics are hard to understand.
At least there’s clarity now. When ALPA cut UA absolutely no slack during the worst of Covid when the company was trying to survive and forced UA to remove 6 seats from some EMB-175’s, rarely is a “message” so clear.
It was a enforceable contract that United signed
has United cut its passengers any slack or does it push its rights to the detriment of flyers ( including changing your early booking flight times so they can sell it for higher price while you get a less popular flight)
https://thepointsguy.com/news/united-removes-seats-from-e175/
They also cut seat numbers on RJ before Covid too
Goforride:
Why cut Mitsubishi any slack? There was nothing that ever supported that Scope would go away other than speculation.
Getting caught in an echo chamber leads to bad results.
All you had to do was interface with the Pilot unions and ask them.
It all depends on what the employer offers. Everything is negotiable.
I think Goforride was referring to Embraer, which made the same mistake re: E175-E2.
Yes the ‘reconfigured’ Space jet M100 could make it under scope rules including have 3 classes of seating
Well covered in Leeham stories:
‘ The newly branded M100 seats 76 passengers in a three-class configuration and has a maximum take-off weight of 86,000 lbs, making it Scope-compliant. Only one member of Embraer’s E1 family is Scope-compliant, leaving the M100 with just a single competitor. The E175-E1 is old technology, however.
In non-Scope-limited markets, the M100 can seat 88 passengers in a high-density configuration with 29-inch seat pitch, or 84 seats with 31-inch pitch.”
https://leehamnews.com/2019/06/17/paris-air-show-day-one-mitsubishi-makes-case-for-spacejet-market-opportunity/
Not really relevant.
The M100 version , a *reconfiguration * of the MRJ70, was able to be scope compliant for weight have a reasonable range and be able to seat 76 in the more desirable 3 class.
https://leehamnews.com/2019/06/13/how-mitsubishi-aircraft-morphed-the-mrj70-into-the-m100-spacejet/
The production plans and certification progress were all around the bigger 90 seater up till the ‘pause’
Hire and pay the pilots according mainline agreements and you can what ever small jet you like.
Delta does so with its A220-100
Any indication that it’s economical to fly A220s in place of *all* regional jets?? There’s a reason for the rj niche market I believe.
Delta replaced its small jet DC-9s with A220 . No one said it was replacing the scope regional jets
Delta got rid of its DC-9-40’s, the plane closest in size to the A220-100 years ago.
By getting the 717’s from Boeing (at an attractive take-these-off-our-hands-please price), they were able to expand the number of regional jets allowed under their scope clause.
Delta really has two things going simultaneously-the A220-100’s, which will replace the 717’s and fill a scope niche, and the A220-300’s, which will fill the slot currently taken by their A319’s.
One of the issues with MRJ Spacejet is that MHI ignored how commercial aircraft are sold globally First, the Japanese domestic market is too small to justify the production of this aircraft. Second, they kept most if not all the major production within Japan and not outsourced to other countries to attract airlines that are government owned or influenced. (Japan is not a low cost producer, and their “robotic” assembly line would probably end of like the 777 FAUB (scrapped)
So is there market outside of Japan and who has the money to fund the completion and selling/leasing of the aircraft?
So let’s assume it gets FAA/EASA certification, second the US market is closed to the aircraft (pilots) and China market will focus on their ARJ21 because of government influence
Is there a market for replacing all those CRJs flying today? Is the future market for air traffic growth in Southeast Asia? Does China have influence in Africa?
If you want to connect the dots, Comac has the money for finishing the production and Chinese leasing companies have the the money for selling. China can gain insight and experience on FAA/EASA certification, setting of MRO outside of China to service Southeast Asia and Africa (emerging regions)
As for production, Japan is not a low cost production even with Japanese government subsidies. So who wants to develop their commercial aircraft production? and have large commercial aircraft fleet? and has money? Mubadala Aerospace (Strata Manufacturing is owned by Mubadala Investment Company)
So a possibility of joint venture with China and UAE (Comac and Mubadala Investment Company) You might want to even include Tata from India into the joint venture. FAL UAE and avionics), fuselage tube India, wings China (Xian)
Simple answer to that is No.
Comac already has their own modified DC-9 in production as the ARJ21 80-90 seater , 5 abreast, and they did a nice job of it ( with help from Antonov for the new wing shape).
No other country does scope restrictions as 80-90 seats for a twin jet is about right, under that and you are in turbo prop territory.
From memory Comac was involved in the Cseries/A220 doing part of main fuselage. Didnt lead to any orders, so was a wasted effort from Bombardier to curry favour in China , as western manufacturers of all types are required to do.
Did I say it was a No ?
I worked in Nagoya for 2 years on the MRJ program 2015-2017, it was abundantly clear that MHI and by association the MHI staff continually let perfection get in the way of progress which, as has already been stated, is a cultural norm in Japan. They were desperate for our help (which was given willingly) but the “establishment” were unable / unwilling to acknowledge their failings in terms of the a/c design and cert strategy, Japanese pride and honour got in the way of pragmatism and results.
@Tailcone Charlie (and Kevin Horton)
You both are spot on with your thinking on Japanese business culture.
Having accomplished work with Japanese airlines during my Boeing career, I can confirm to what you’re both summarizing. This is the crux of the problem.
I knew quite a few engineers that jumped ship from Boeing to work and provide technical assistance to MITAC, but they didn’t want to listen.
Airplane certification is not automobile manufacturing.
I hear they are the same in Japan when they bring in foreign sport coaches/players. They still want to do it their way. But the people/cultural experience is still tops.
I know I keep saying this . But the missing link was a Mitsubishi- Bombardier tie up back when the Cseries was in development. They would have bought money and airframe sub assemblies nous ( better than the partner they did have in China…enough said) and of course The replacement for the CRJ would have tied in with Bombardier and used their certification
and plane support nous.
Mitsubishi does build the wings for Bombardier’s very large Global business jets
And Mitsubishi builds the 787 wings in Japan. The very first time Boeing outsourced complete wing builds.
Didn’t they outsource the wings to Fuji for the 767?
Wing centre box . Same for 777 and 787.
Other 767 wing assemblies come together in Boeings Frederickson plant and are trucked up to Everett- just as are large sections of 777 wing are. Its a truck with a separate low rider unpowered truck with its own driver for the rear end 100ft back.
767 Everett wing line with Gemcor WRS
Eamonn Fingleton on Boeing, ten years ago:
“..Even more troubling, however, has been the long-term cost in weakening Boeing’s competitiveness. This is something I identified in “Boeing, Boeing….Gone,” a cover story for The American Conservative, as far back as 2005. The point is that among the things Boeing has outsourced have been the wings and the wing-box. These are by far the most technologically advanced elements of an airframe and they were outsourced to a Japanese consortium led by Mitsubishi Heavy Industries. Part of the deal was that much of Boeing’s secret wing-building know-how had to be transferred to Japan..”
https://www.forbes.com/sites/eamonnfingleton/2013/01/21/what-went-wrong-at-boeing-my-two-cents/
Airbus outsources , even to Spirit in US. Embraer hardly makes any of its airframe assemblies
There was a big stink when Douglas had the DC-9 wing built in Canada in the early 60s ( they eventually bought the Toronto factory)
You are living in the past if you think there is even much capacity in the US to build civilian airframe sections on sub contract. Those places like Northrop, North American AVCo etc arent around anymore, and Spirit and 1 or 2 others left.
Boeing had to stop 747 builds , one of the reasons was the fuselage sections supplier didnt want to continue- and they have been using stockpiled sub assemblies for a couple of years
“Boeing, Boeing….Gone I know the article well
It all depends on what the employer offers. Everything is negotiable.
“The Bombardier CRJ900 has roughly 8% lower fuel burn than the E175 when both have 76 seats”
CRJ900 ended production in December 2020 Bombardier only produces business jets
After some poking and prodding, I figured out that United is going to ground Republic’s 38 EMB170’s and replace them with 38 CR9’s from Mesa.
They must be going to reduce capacity from 76 to 70 seats, which, unless they just leave some empty space in the cabin, could make for a nice ride.
I’m sure the difference in fuel burn between the CR9 and the EMB170 must be even greater.
So from customer perspective, go from a comfortable 2 x 2 seating in the “real” fuselage to seating iin long skinny tube that was designed for 50 seat aircraft
The customer doesn’t have to like it. He just has to buy a ticket. If not liking it were such an impediment, there wouldn’t be nearly 1,000 rj’s in operation today.
The lesser capacity is because of introduction of *economy plus* seating fleet wide for United.
The extra floor space required was also why the E175 neo had a cabin stretch while staying at the same scope pass limits
I don’t think that’s it. AAE already operates the CR9’s with whatever AA calls their version of Economy Plus.
Yes. Thats AA. They did mention United who so far dont have any CR9s flying in the brand to check on seat counts
United CR7 have 70 seats including 16 econ plus
They hired a bunch of clowns from the west to head the program.
Mesa Average age CRJ900 is 16 years….with half the fleet stored
https://www.planespotters.net/airline/Mesa-Airlines
To be clear, it wasn’t Mitsubishi’s inability to make an aeroplane that failed, it was their inability to comply with the bureaucracy that now control this industry.
In 2020:
-> “The company’s *priority will be on obtaining type certification for the SpaceJet M90*. In order to maximize the efficiency of type certification flight tests in the future, this fiscal year, Mitsubishi Aircraft will focus on re-organizing, improving the current design at the aircraft-level, and validating data earned by over 3,900 hours of flight test.
https://www.mhi.com/group/mitac/news/2020/20200615.html
Sign that MHI “paused” the development of M100?