Contrary to earlier positive predictions
Multiple articles have forewarned the impending doom of Boeing and Airbus, plus their respective partners, Embraer and Bombardier, due to the invasion of new manufacturers from China, Japan and Russia, which collectively are producing the above four regional jet aircraft:
The analysts and experts (?) have been proclaiming that the Boeing-Airbus duopoly (actually should include Canadair and Embraer) is soon to be challenged by new competitors, particularly Comac and Mitsubishi. Those opinions grossly underestimated the degree of engineering, design and certification knowledge are required to create and manufacture these complex machines.
Recent news appears to confirm that the technical and financial hurdles are a little higher than thought.
C919’s flight-deck design to satisfy Part 25.1302 of the Federal Aviation Regulations (FAR).
Despite 10 years of development and a wealth of support from foreign firms, China’s efforts to gain entry into Western markets with an indigenous airliner continue to progress slowly as Comac struggles to bring its ambitious C919 project in line with U.S. Federal Aviation Administration requirements.
According to a source working closely with Comac who spoke with AIN on condition of anonymity, engineers have begun re-evaluating the C919’s flight-deck design to satisfy Part 25.1302 of the Federal Aviation Regulations (FAR).
“Section 1302 is quite strict on human factors and necessary for FAA certification, but it’s not required by the CAAC,’’ he told AIN. ”So now there is a conflict between whether they have to meet 1302 requirements or not. If Comac wants to sell aircraft outside of China…there is always the constant debate of how much of the requirements they need to comply with coupled with how many design changes are necessary and how much money needs to be spent.’’
Comac’s challenges in meeting the certification procedures required to enable sale in the U.S. reflect a larger problem plaguing the aerospace manufacturer, namely technical know-how. While foreign experts in China transfer manufacturing knowledge and R&D capabilities, communication problems, misinterpretation of FAA requirements, and limited local skills have significantly delayed progress.
The challenges have become evident as the C919 continues to undergo further envelope expansion testing at its Shanghai facility and the team there encounters repeated setbacks due to disruptions in design changes and a shortage of local expertise.
“As always, they’re learning, which means it’s going to take longer,’’ said the source. “It’s not like you are working with Airbus or Boeing who can go through this process within an 18-month time span. You need to account for the learning curve.’’
While Comac slowly moves towards improving its overall technological capabilities, repeated delays and reliance on foreign assistance will remain for some time, raising doubts that the Chinese can develop an indigenous alternative to the C919’s CFM Leap-1C engines within a decade.
While joint ventures with foreign firms can serve as effective vehicles for knowledge transfer, foreign firms recognize the need to carefully safeguard their intellectual property and technologies, perhaps compromising the collaboration needed to meet Comac’s first-delivery target of 2021.
Mitsubishi MRJ burdened by 220 billion yen debt
TOKYO (Reuters) – Mitsubishi Heavy Industries (7011.T) is arranging 220 billion yen ($2 billion) in financial support for its aircraft unit, which has struggled to deliver its first passenger plane, national broadcaster NHK reported on Tuesday.
Mitsubishi Heavy said in a statement that it was considering ways to resolve excess liabilities at the unit, but added it had not yet made any decisions.
Mitsubishi’s regional jet program, Japan’s first passenger plane since the 1960s, has been delayed by several years, with first customer ANA Holdings Inc (9202.T) now expecting its delivery in 2020 rather than 2013 as originally planned.
The 90-seat MRJ was long seen as Japan’s great hope to revive a dormant commercial aviation industry. Japan was banned from manufacturing aircraft for nearly a decade after World War Two.
According to NHK, Mitsubishi’s aircraft unit will issue shares worth 170 billion yen as part of a debt-to-equity swap, while Mitsubishi Heavy will forgive 50 billion yen of debt.
The aircraft unit’s debts exceeded assets by about 100 billion yen at the end of March, the broadcaster also said.
Mitsubishi Heavy CEO Shunichi Miyanaga told a press conference in May that the company would increase Mitsubishi Aircraft’s capitalization this fiscal year “to enable it to emerge from insolvency”.
Analysts said there were still questions over whether the jet project could deliver.
“This support will, of course, improve Mitsubishi Aircraft’s balance sheet. But that doesn’t necessarily mean the same thing as accelerating the jet’s development,” said Kentaro Maekawa, a senior analyst of Nomura Securities.
The news comes on the heels of Canada’s Bombardier Inc’s (BBDb.TO) decision to sue Mitsubishi’s aircraft unit, saying former Bombardier employees passed on trade secrets to help Mitsubishi’s jet project.
Mitsubishi Heavy’s shares were down 2.7 percent in afternoon trade, slightly underperforming the broader market.
Mitsubishi Aircraft Corp is 64 percent-owned by Mitsubishi Heavy Industries (7011.T), with Toyota Motor Corp (7203.T) and Mitsubishi Corp (8058.T) each holding a 10 percent stake. Other shareholders include state-owned Development Bank of Japan, Sumitomo Corp (8053.T) and Mitsui & Co (8031.T).
Reporting by Takashi Umekawa; Editing by Edwina Gibbs and Stephen Coates
There will come a time when these two aircraft hit the market and sales will be booked. The price of the MRJ will either reflect the substantial capital poured into it or will be subject to the same trade reviews which Airbus and BOMBARDIER have experienced. Once COMAC resolves the regulatory compliance issues it has incurred, it will have to prove it has the supply chain and inventory management capabilities required to support its aircraft stationed around the globe.
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