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Business

Trio offers to team with Boeing on next-gen plane

Boeing's 787

TOKYO -- Three Japanese companies have proposed a risk and revenue sharing partnership with Boeing to develop the U.S. aerospace giant's next-generation small passenger aircraft.

     The plan by Mitsubishi Heavy Industries, Kawasaki Heavy Industries and Fuji Heavy Industries would have each partner contribute part of the development and commercial production costs for the aircraft, thought to be the successor to Boeing's 737 Max series entering commercial flight in 2017. The trio would split profit from the project with Boeing in proportion to each's investment, thereby taking on part of the risk of revenue shifts.

     The plane would seat 150 to 200 passengers. Demand for such aircraft is seen growing in the long term, particularly from developing nations. Details such as when the proposed craft would go into service are unclear. But development and production costs are seen totaling several hundred billion yen (100 billion yen equals $892 million).

     Boeing is weighing the proposal, with a decision expected by 2017.

     Mitsubishi Heavy handled development of the wing for Boeing's latest-model passenger jet, the 787. Kawasaki Heavy developed that aircraft's forward fuselage, while Fuji Heavy took charge of components including the center wing, which connects the wing to the fuselage. In all, Japanese companies produce 35% of the 787's body. That share will be 21% for the next-generation jumbo jet 777X, which enters commercial flight in 2020.

     Yet for those projects, Japanese manufacturers act only as suppliers, making and stocking parts for a contracted price. The risk-revenue sharing model proposed for the next aircraft is designed to break away from the subcontract structure that has been in place for around 40 years.

     The U.S. company's new-model regional jet lags behind that from Europe's Airbus, and is accordingly losing the battle for orders. Japanese companies, with their high technological prowess and experience in aircraft manufacturing, are thought to make appealing partners on a next-generation flagship aircraft as Boeing attempts to overpower its rival.

(Nikkei)

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