Embraer and Mitsubishi Heavy could see an uptick in business from Japan Airlines as the bankrupt carrier rejigs its fleet towards smaller and more fuel-efficient aircraft.
JAL, which filed for bankruptcy protection on Tuesday as part of a state-led restructuring, plans to retire all of its 37 Boeing 747-400 jumbo jets and all 16 McDonnell Douglas MD-90 planes and buy smaller aircraft to take their place.
The downsizing by Asia's largest airline by revenue could translate into new orders for Embraer and possibly help the Mitsubishi Regional Jet (MRJ) project, majority owned by Mitsubishi Heavy Industries, get off the ground, analysts said.
"This will put both Embraer and MRJ in the spotlight," said Kotaro Toriumi, an airline analyst and professor at Josai International University.
"Smaller and regional jets will become the industry's mainstream. Embraer has already been growing its market share, but this might help MRJ get more orders globally."
The state-backed fund in charge of restructuring JAL, the Enterprise Turnaround Initiative Corporation of Japan, said in a statement on Tuesday that the carrier would introduce 50 small and mid-sized regional jets as part of its revival plan.
"JAL has a number of large, fuel-inefficient aircrafts and that has been costing it a lot," Akitoshi Nakamura, an executive director at the ETIC told a news conference on Tuesday after JAL filed for bankruptcy with USD$25 billion in debts.
While the ETIC did not publicly disclose the likely recipient of JAL's orders on Tuesday, in a more detailed document the fund specifically named Embraer's ERJ as a possible aircraft for JAL's new fleet.
Embraer is the world's third largest commercial aircraft maker after Airbus and Boeing, and makes regional jets seating up to 120 passengers, as well as business jets and military aircraft.
JAL already owns two ERJs. Japanese regional operator Fuji Dream Airlines is set to receive its third ERJ next week.
MADE IN JAPAN
Mitsubishi Heavy is keen to drum up more business for the MRJ, Japan's first domestically developed passenger jet.
Mitsubishi has so far received orders for 125 aircraft, including 25 from JAL's domestic rival All Nippon Airways. Mitsubishi aims to deliver the first one in 2014 and has stated a long-term goal of selling 1,000 jets.
Some analysts believe the state's involvement in JAL's restructuring could help the MRJ project. Drawing on state-backed funding, the ETIC plans to put JPY300 billion in capital into JAL and shoulder part of a JPY600 billion credit line.
The appointment last week of Kazuo Inamori, the 77-year-old founder of electronics maker Kyocera, to serve as JAL's new chief executive has also fanned some expectations for the MRJ.
Inamori said in a statement on Tuesday that he agreed to take the job because he thought he could contribute to the Japanese economy through JAL's turnaround.
While many Japanese parts makers supply Boeing and Airbus, the MRJ is seen by some as the country's final hope for aircraft manufacturing.
"MRJ is the 'made in Japan' aircraft, and the government has also been involved in its development. Considering that, it makes sense that JAL would choose to place MRJ orders after the state bailout," said aviation industry consultant Reiko Sonoyama.
Sonoyama added that JAL may also look to retire its 18 Airbus A300 widebody planes and use Boeing 767s instead.
"That makes the most sense because in that way the carrier can cut more costs on aircraft maintenance, and training for cabin crew and pilots. But the question is whether they can do that much (restructuring)," she said.
