ANALYSIS: MRJ delay eats into first-mover advantage

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Despite Mitsubishi Aircraft's confidence that sales prospects for the Mitsubishi MRJ regional jet will not be hurt by the recent delay announcement, analysts are less optimistic.

The delay of the MRJ90's first flight by more than 15 months to Q2 2015, with first delivery, to All Nippon Airways (ANA), moving back to the summer of 2017, cuts deeply into the first-mover advantage the MRJ has over Embraer's new E-Jet E2 family. Analysts also doubt the programme can secure any big orders before the aircraft actually flies.

With the most recent delay, the third since the programme's launch, the MRJ will only enter service a year ahead of Embraer's 97-seat E-190 E2 - provided neither airframer makes further schedule changes.

Data from Flightglobal's Ascend Online Fleets database indicates that Mitsubishi is to build four MRJs in 2017, before ramping up to produce 31 aircraft in 2018, followed by 51 in 2019. Based on current firm orders for 165 aircraft, production is scheduled to 2022.

Embraer, meanwhile, is expected to manufacture five E2s in 2018, followed by nine in 2019, before cranking up production rates into the 20s from 2020. With its 150 aircraft order book, production is to continue through to 2027.

"The delay does eat into the schedule advantage that the MRJ has had over Embraer's re-engined E2 series," says Ray Jaworowski, Forecast International's senior aerospace analyst. "Potential customers looking for early delivery slots will now take a serious look at both aircraft before making a purchase decision."

Rob Morris, senior consultant at Ascend, adds that the shortened period between the entry into service of the two aircraft works in favour of Embraer, which already has an advantage given its significant customer base for earlier E-Jets.

"It's also unlikely that the E2 will see similar delays given its derivative nature," he adds.

While the MRJ is a new aircraft project by the Japanese, the E2 is an upgraded version of Embraer's E-Jet family with new engines, wings and upgraded avionics. Both aircraft will be powered by Pratt & Whitney's geared turbofan engines - the PW1200G for the MRJ and the PW1900G for the E-190/195.

The MRJ delay, however, did not come as a complete surprise, especially in light of delays to other high profile programmes in recent years, namely the Boeing 787 and Bombardier CSeries. The delay was also somewhat anticipated considering Mitsubishi's position as a rookie airframer.

Analysts say it is imperative that Mitsubishi assuage concerns among customers and prospects, and also work to reduce any impact of programme delays on future orders.

"Mitsubishi needs to clearly explain to their customers (and prospects and the market) the rationale behind the delay. They also need to set out the revised programme and then demonstrate achievement of clear milestones towards the revised first flight and subsequent first delivery," says Morris.

He adds that further delays could "fundamentally damage the programme".

SkyWest Airlines, which made an order for 100 MRJ90s, with an option for an additional 100 of the type in 2012, had previously said that the availability of the MRJ in 2017 is one reason it picked the aircraft.

"We have seen delays recently of several aircraft programmes so this is common. If there are further delays, we would have to reconsider our response to this question," says its chief financial officer Michael Kraupp in response to questions on how the MRJ delay has affected SkyWest's fleet plans.

"I would also believe that the recently announced delay could have a temporary effect on current sales campaigns. At this time, we will simply have to wait and see how they deliver on their revised plan," he adds.

More than just impacting sales, the MRJ programme's delay could also have a knock-on impact on the launch of its stretched 100-seat variant. Mitsubishi told Flightglobal Pro at the Paris air show that airlines have requested a 100-seat regional jet, and that there is "a good chance" it will launch the project, though the focus is still on making sure the MRJ90 takes to the skies.

"Such a model would be a natural progression for the MRJ series, given the trend in the regional jet market toward larger capacity aircraft. If Mitsubishi chooses to launch the MRJ100, a significant delay in doing so would cede a considerable early sales advantage to such aircraft as Embraer's E2 series and the Bombardier CS100 CSeries model," says Jaworowski.

Mitsubishi has a backlog for 165 firm orders with 160 options.

Embraer, meanwhile, has a firm order for 100 E-175 E2 aircraft, 25 E-190 E2 and 25 E-195 E2, and another 150 of these aircraft on options and purchase rights. It has also secured letters of intent totalling 65 E-Jet E2s from unnamed customers.