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Buyer Community> Trade Intelligence> Financial Markets> INTERVIEW-UPDATE 2-M'bishi Aircraft aims for profit in 10 years
Source: Reuters

INTERVIEW-UPDATE 2-M'bishi Aircraft aims for profit in 10 years

Published: 25 Sep 2010 18:11:24 PST

* In talks with 5-6 firms on sales of Mitsubishi Regional Jet

* Wants to make 6 jets a month in 4-5 years after launch

* Plans to to develop a 100-seat model by 2018 or earlier

* Looking for a firm to offer maintenance, technical support (Updates with more details, quotes)

NAGOYA, Japan, Sept 22 - Mitsubishi Aircraft, the maker of Japan's first domestically developed passenger jet, is in talks with 5 to 6 potential customers and aims to turn profitable in 10 years when it will have cumulatively sold 500 planes, its president said.

The company, owned 64 percent by Mitsubishi Heavy Industries, is planning to start production of the Mitsubishi Regional Jet (MRJ) by early next month and make its first deliveries to customers in 2014.

The MRJ will be built in 70-seat and 90-seat variants, placing it in competition with jets made by Brazilian group Embraer and Canadian company Bombardier Inc as well as planes designed by Russian and Chinese firms.

Mitsubishi says its planes will be 20 percent more fuel efficient than rival aircraft, allowing carriers to cut operating costs. The jet is expected to sell for about $40 million each.

"We want to be making six jets a month in 4-5 years time after the product launch. If that manufacturing level continues for 6-7 years, that's when we should clear the break-even point," Hideo Egawa, head of Mitsubishi Aircraft, told Reuters in an interview.

"By that time, MRJ should also be able to have built a good and solid reputation in the market."

Japanese airline All Nippon Airways has already committed to buy 25 of the jets, while Trans States Holdings of the United States last year placed an order for 100.

But Mitsubishi was unable to secure any deals during the Farnborough Airshow this year, partly due to delays in its launch schedule. Russian rival Sukhoi Co fared better at the show, selling Superjet 100 models including 12 to Orient Thai Airlines.

Egawa, who was a vice president at Mitsubishi Heavy before taking the helm of the aircraft firm, said there were ongoing talks with 5 to 6 airlines and leasing firms and that he expects interest to grow with the jet going into production.

"So far MRJ has been something just drawn up on a paper. Now it's turning into a real aircraft. I think people have started to believe our commitment," Egawa, 66, said at the company's headquarters in Nagoya, central Japan.

Mitsubishi Aircraft is in a hurry to find a company that could handle maintenance, repair and overhaul (MRO) for the MRJ, which will be powered by engines from Pratt & Whitney, a unit of United Technologies, Egawa said.

The firm is looking to hire more sales staff at its Dallas office, while launching a representative office in Europe, as it seeks to expand its customer base and reach a goal of selling 1,000 jets over 20 years.

Egawa also said the company plans to develop a 100-seat MRJ model by 2018 or earlier after the smaller models are successfully launched. Jets of that size are popular with European carriers.

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