Mitsubishi Heavy Industries (MHI) will cut hundreds of jobs in Washington state as it "consolidates all activities back to Japan" and close its U.S. operations for the troubled SpaceJet project, the company said Friday.

"Due to the budget directives, Mitsubishi Aircraft will close its overseas locations and consolidate activities at its headquarters in Nagoya, Japan," company spokesman Jeff Dronen said via email. "This will impact the majority of our employees in the United States."

The Mitsubishi Aircraft U.S. headquarters in Renton will close, and flight test operations in Moses Lake will cease, he said.

The four test aircraft that have been flying in Moses Lake will be put into storage, and the fifth flight test plane -- the first updated with a new configuration -- will not fly to the U.S. as planned just a month ago, but will stay in Japan.

Dronen said Mitsubishi will retain "a small crew" at Moses Lake to put in storage and maintain the four flight test aircraft there.

Mitsubishi is still working out the details of its budget cuts and did not disclose the precise numbers of employees affected nor whether severance packages will be offered. Dronen said management "will provide this information directly to employees in the coming weeks."

At one point the program supported about 400 jobs flight testing the initial M90 model in Moses Lake, along with a further 200 jobs in Seattle at Mitsubishi's U.S. partner AeroTEC, which provided testing, engineering and certification support.

Will SpaceJet go on?

Mitsubishi is not formally canceling the SpaceJet program, but its future must now be in serious doubt.

A company official who was briefed on the plans Thursday said that the first priority is to achieve the steep budget cuts planned by MHI. After that's done, management hopes to continue analysis and validation activities required for certification of the airplane, he said.

However, it's difficult to see how much progress can be made without flight tests. The Moses Lake site was chosen for flight tests both for its clear airspace -- unlike the limited space in Japan -- and for the expertise available in the state to support certification work.

If and when flight tests resume, it's unclear if they would return to Moses Lake. Dronen said several flight tests have been conducted in Japan on the fifth flight test plane and it's a "possibility" that flight tests could be completed there.

At this point, Mitsubishi has no clear plan.

"We have had to make difficult decisions that will significantly reduce our global activities and will have a major impact on our organization," Dronen said.

The news comes after the Japanese industrial giant announced last week an overall loss of $275 million for the fiscal year ending in March -- a cash drain that management deemed no longer acceptable as it faces the dramatic pandemic-driven downturn affecting all of Mitsubishi's aviation operations, including its supply of major parts for Boeing jets.

Mitsubishi said then it would halve the SpaceJet budget for next year to reduce its "ballooning investment" and would suspend development of a newly revamped M100 second variant, designed specifically for the U.S. market, that had been announced with fanfare at last year's Paris Air Show.

Last week's financial results showed the SpaceJet bleeding cash, with development costs of $1.3 billion in the last fiscal year, plus a $1.1 billion write-off to cover the building of additional prototypes and flight testing after a major redesign of wiring systems. The year before, the project's development costs were $792 million.

Mitsubishi said the SpaceJet budget for the coming fiscal year will be cut to $560 million.

Ambitious plans, never delivered

The aircraft was launched as the Mitsubishi Regional Jet in 2008. With a sleek all-new design and a roomy passenger cabin, the goal was to enter service five years later. After early setbacks, it began flight tests in 2015 in Japan, then in 2016 moved the flight testing to Moses Lake in eastern Washington.

In Paris last June, with the fledgling jet program already running seven years late, Mitsubishi rebranded the plane as the SpaceJet and revamped the concept with a complete structural redesign for the smaller M100 variant.

However, in February, the program received another setback when certification of the M90 version was delayed and its entry into airline service pushed out yet another year.

The massive aviation downturn precipitated by the coronavirus pandemic seems to have finally quashed MHI's hopes of reviving the jet's fortunes.

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