The beleaguered SpaceJet regional aircraft programme, which recently saw its developmental budget halved, made up the bulk of losses parent company Mitsubishi Heavy Industries (MHI) incurred, in its first quarter earnings.
For the quarter ended 30 June, the SpaceJet programme made a loss of Y68.8 billion ($648 million), due mainly to the impairment costs from the acquisition of the CRJ regional jet programme from Canadian airframer Bombardier, says MHI. Other costs that affected profitability include development costs amounting to around Y20 billion.
Mitsubishi Aircraft has started downsizing operations around the SpaceJet in a bid to reduce costs. It closed all non-Japan locations, moving activities back to its headquarters in Nagoya.
As part of the consolidation to Japan, the company also suspended development of its 76-seat M100. The programme has also had an organisational shake-up that saw the departure of several high-ranking executives, including its chief development officer and its global marketing and strategy head.
MHI sank to a loss of Y71.3 billion for the quarter, with its aircraft, defence, and space unit, in which the SpaceJet programe resides, emerging as one of the worst hit segments from the coronavirus outbreak, as it tumbled to a steep loss in its first quarter earnings.
The unit reported a quarterly loss of Y62 billion, reversing the Y9.4 billion profit it made the same period last year.
Revenue for the period saw a marginal year-on-year increase of nearly 2% to Y155 billion, led primarily by defence aircraft and missile systems. The unit saw the value of orders for the period shrink nearly 13% year on year to Y76.5 billion.
MHI notes that revenue from its commercial aircraft segment, mainly comprising the aerostructures and aero engines businesses, was badly hit by the pandemic, reporting an average year on year revenue decline of 50%.
“Risks remain that production rate plans going forward may require further changes. We are implementing operational adjustments and fixed cost reduction measures,” MHI adds.
The unit delivered far fewer shipsets for the Boeing 777 and 787 programmes this quarter. It delivered six 777 and 777X shipsets this year, compared to 16 last year. As for the 787 programme, the unit delivered 18, compared to 43 last year.