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MHI throws Y220bn lifeline to Mitsubishi Aircraft

Mitsubishi Heavy Industries (MHI) has thrown a Y220bn ($1.94 billion) financial lifeline to its Mitsubishi Aircraft unit, developer of the troubled MRJ regional jet.

The financial support package will involve a capital injection of Y170 billion ($1.5 billion) into the aircraft manufacturer, and the cancellation of Y50 billion in debt owed to MHI.

As a result, the airframer’s paid-in capital will nearly triple to Y270 billion from Y100 billion, and MHI’s stake will grow from 64% to 86.7%. Other shareholders will see their stake dilute to 13.3%.

“The added capital will bring Mitsubishi Aircraft out of its capital deficit and provide the company with funds to enable continued development of the MRJ,” says MHI.

At 31 March, Mitsubishi Aircraft’s liabilities exceeded its assets by Y110 billion.

An investor presentation by MHI shows that for the six months to 30 September, the MRJ programme recorded no revenue, and made a loss of Y47.2 billion from its operations. That is an improvement on the Y55.4 billion loss for the same period last year.

“With the 170 billion yen to be acquired from MHI, Mitsubishi Aircraft will allocate 85 billion yen to its capital and an equal amount to its capital reserve,” says MHI.

The MRJ90 is expected to enter service with launch customer All Nippon Airways in 2020, six years later than originally planned. Flight Fleets Analyzer shows that the type has 213 orders, while its smaller sibling, the MRJ70, has yet to notch up its first order.

The capital injection comes just over a week after Bombardier filed a lawsuit in the USA against Mitsubishi, alleging that its employees stole trade secrets related to aircraft certification.

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