Mitsubishi Aircraft Corp. will cut more than half of its 2,000-strong workforce in a restructuring move as the coronavirus devastates travel demand and delays continue to plague its regional jet project, a source close to the matter said.
The aircraft-making subsidiary of Mitsubishi Heavy Industries Ltd. will also close its U.S. headquarters, a development center in Canada and sales offices in the United States and Europe, the source said.
While the company’s testing site in the state of Washington will remain, its workforce will be also drastically reduced.
By making the small regional jet, now known as the Mitsubishi SpaceJet, MHI hoped to succeed in the commercial aircraft market as airlines shifted to small and midsize planes from larger ones to improve fuel-efficiency. The plane was supposed to be Japan’s first home-grown passenger jet.
Mitsubishi Aircraft will also reshuffle its development team, with Chief Development Officer Alex Bellamy stepping down and Yasuhiko Kawaguchi, who has experience at the U.S. test site, taking the lead in aircraft development as chief engineer, starting July 1.
MHI is trying to restore its aviation prospects through the regional jet business of Canada’s Bombardier Inc., which recently sold the unit.
But the parent company said last month that it expects to book an impairment loss of ¥50 billion ($470 million) to ¥70 billion from the purchase in the business year ending March . The loss reflects a sharp drop in air travel amid the pandemic.
Mitsubishi Heavy plans to reduce development costs in the aircraft business by more than half to ¥60 billion for the current year.
In February, the company said Mitsubishi Aircraft would delay its first delivery of the small jet to 2021 or later due to parts problems, chalking up its sixth postponement. The plane, previously known as the Mitsubishi Regional Jet, is due to be delivered first to All Nippon Airways Co.