All Nippon to Be 1st Client for Mitsubishi Heavy Jet

27 Mar 2008 • by Natalie Aster

All Nippon Airways Co., Japan's largest domestic airline, placed an order for 25 regional jets to be made by Mitsubishi Heavy Industries Ltd., becoming the first customer for the nation's first passenger jet, reported The Bloomberg.

The firm order for 15 planes is valued at 60 billion yen ($605 million), with an option for an additional 10 jets, the Tokyo-based airline said in a statement today. Delivery of the aircraft will begin from 2013.

Mitsubishi Heavy aims to break the dominance of Canada's Bombardier Inc. and Brazil's Empresa Brasileira de Aeronautica SA in the market for small aircraft with Japan's first passenger plane since 1962. All Nippon will use the new jets to cut fuel costs as prices for jet kerosene rise to a record.

``All Nippon will have more power to negotiate prices if there are more suppliers,'' said Masayuki Kubota, who helps oversee the equivalent of $2.5 billion in assets in Tokyo at Daiwa SB Investments Ltd.

The new plane will use the same type of light-weight, carbon-fiber body parts Mitsubishi Heavy makes for Boeing Co.'s new 787 Dreamliner and be powered by engines made by United Technologies Corp.'s Pratt & Whitney unit.

The jet is designed to be as much as 40 percent more fuel- efficient than Boeing's 737-500 aircraft currently operated by All Nippon, the airline said.

The carrier selected the jet as part of its effort ``to equip our fleet with the safest, most fuel efficient, environmentally friendly and passenger friendly aircraft available today,'' All Nippon Chief Executive Officer Mineo Yamamoto said in the statement.

The aircraft will seat 86 to 96 passengers, All Nippon said.

The company will need at least 100 orders for the plane to cover development costs alone and must sell more planes for the project to break even, said Yuichi Ishida, an analyst at Mizuho Investors Securities Co. in Tokyo.

Mitsubishi Heavy will announce tomorrow whether to proceed with its plan to commercially build the jetliner, said Hideo Ikuno, a spokesman for Daiya PR, which handles Tokyo-based Mitsubishi Heavy's media relations.

``We're glad to hear ANA made a decision to order the aircraft,'' said Hideo Ikuno, a spokesman for Daiya PR, which handles Tokyo-based Mitsubishi Heavy's media relations. ``Whether or not the project will be launched will be discussed at a board meeting scheduled for tomorrow.''

State-controlled Vietnam Airlines Corp. is in final talks to order 20 passenger jets, the Nikkei newspaper reported on March 22, without saying where it got the information. The 64 billion yen ($641 million) contract may be signed as early as next month, the newspaper said. Emirates, the biggest Arab airline, denied a Kyodo News report this week it was in talks to buy the jet.

International Lease Finance Corp., the world's largest aircraft-leasing company, is considering the plane, Flight Global reported on March 11.

Japan Airlines Corp., Asia's largest airline by sales, is considering an order for the jet and is still undecided, spokesman Stephen Pearlman said today.

The Mitsubishi Regional Jet would be the first Japan-made passenger plane since the YS-11 turboprop that first flew in 1962 and ended production in 1973. Mitsubishi Heavy and other aerospace companies now supply parts to Boeing and Airbus SAS.

All Nippon fell 0.2 percent to 436 yen at the close of trading in Tokyo today, before the announcement. Mitsubishi Heavy was unchanged at 434 yen.