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M'bishi Heavy to add 200 bil. yen to rising jet development costs

This photo taken on June 27, 2018, shows the Mitsubishi Regional Jet, the first Japanese-made commercial jet under development by Mitsubishi Aircraft Corp., taking off for a test flight from Grant County International Airport in the state of Washington. (Kyodo)

TOKYO (Kyodo) -- Mitsubishi Heavy Industries Ltd. plans to provide 200 billion yen ($1.79 billion) to its struggling aircraft subsidiary, as costs for the long-delayed development of a passenger jet are set to rise more than fourfold from the initial budget, a source close to the matter said Friday.

Mitsubishi Heavy will provide Mitsubishi Aircraft Corp. with some 120 billion yen by next March as a first step to speed up the development of the Mitsubishi Regional Jet, the first commercial passenger jet developed in Japan, the source said.

The Mitsubishi group hopes the stepped up development should help in delivering the first aircraft to All Nippon Airways Co. during the fiscal year through March 2021 as currently planned, after delivery has been delayed five times from the initial schedule for 2013 due to design modifications.

The aircraft maker remained in a negative net worth at the end of March this year, with development costs for the MRJ having risen fourfold from the initial estimate to 600 billion yen.

The latest decision comes as costs could increase further to 800 billion yen, the source said.

Mitsubishi Heavy said in May it plans to bolster the capital of the subsidiary by the end of next March but has declined to clarify how much its capital will be increased.

Mitsubishi Heavy holds a 64 percent stake in Mitsubishi Aircraft with Mitsubishi Corp. and Toyota Motor Corp. each owning a 10 percent stake. The state-owned Development Bank of Japan also has a 1.0 percent stake.

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