Mitsubishi Aircraft Corp. will cut more than half of its 2,000 workforce as part of restructuring amid a plunge in demand due to the coronavirus pandemic and repeated delays in its development of Japan's first passenger jet, a source close to the matter said Friday.
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.
With the small aircraft known as Mitsubishi SpaceJet, Mitsubishi Heavy hoped to succeed in the commercial aircraft market as many airlines shift to small and midsize planes from larger ones due to mileage efficiency.
Mitsubishi Aircraft will also reshuffle its development team, with Chief Development Officer Alex Bellamy stepping down while Yasuhiko Kawaguchi, who has experience working at the U.S. test site, will take the lead in aircraft development as chief engineer, starting on July 1.
Mitsubishi Heavy has been trying to restore its aircraft business with the recent acquisition of the regional jet business of Canada's Bombardier Inc.
But the parent company said last month that it expects to book an impairment loss of 50 billion yen ($470 million) to 70 billion yen in the current business year through March related to the purchase. The loss reflects a sharp drop in air travel demand amid the virus outbreak.
Mitsubishi Heavy plans to reduce development costs in the aircraft business by more than half to 60 billion yen in the current fiscal year.
The company said in February that Mitsubishi Aircraft would delay the first delivery of the small passenger jet to 2021 or later due to parts problems.
It was the sixth postponement of the delivery of the aircraft, previously known as the Mitsubishi Regional Jet, to launch customer All Nippon Airways Co.