- "The biggest mistake people make when getting into the aircraft business is (thinking) that the cash hemorrhaging ends once you start delivering aircraft," said Aboulafia.
"But very often, it increases," he said, citing marketing and production ramp-up costs.
Fujino, CEO of Honda Aircraft Company, has said he expects it will take at least five years to start generating profits, and Aboulafia thinks it could take much longer to recoup sunk costs.
"If they, miraculously, can generate $1 million in profit on each aircraft, then they need to sell 1,000 planes, after they build the (first 100 or so) aircraft that are unprofitable," he said.
For comparison, Gulfstream delivers 100-150 planes a year.
Well, to be fair, Japanese businesses can be really hard to understand sometimes. Sometimes they seem like one big company making tons of different products, like General Electric here in America, only more extreme. Is Mitsubishi primarily a manufacturing company or primarily a finance company? Other times they seem like a ton of smaller companies that are allied really formally through sharing ownerships and such, like Toyota have a major chunk of Fuji Heavy Industries' pie (which gave us the 86/BRZ, so it's totally cool).
The point I was really trying to make though, is that I think part of the reason a lot of these bigger companies have such a variety of products is because they embrace the idea of trying new things, figuring out what works, and doubling down on it. If history went differently, maybe we'd be hearing now about how Honda's jets are dominating the market and maybe Asimo, like a simple piston ring was back then, will be the start of Honda's new future.
That's not hard to understand, that's diversification. It wasn't that long ago that the bulk of GM's profits came from GMAC. My mother used to run a water quality lab - for Pan American Airlines. At this point, what doesn't Google do?
What's noteworthy here is the amount of money sunk by Honda in a mature industry with limited profit margins and comparatively small marketshare. It's not unheard of, obviously - if you'd told me that Brazil would be a leading source of light commercial aircraft 20 years ago I would have stared at you jaw agape yet here we are. But you have to assume that they anticipate their investment to pay off some other way. This, after all, is a Mitsubishi.
