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UPDATE 1-Mitsubishi Aircraft says Trans States cancels order for 50 SpaceJet regional jets

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Oct 31 (Reuters) - Japan's Mitsubishi Aircraft said on Thursday one of its biggest customers, Trans States Holdings (TSH), has cancelled an order for 50 of its SpaceJet M90s because the aircraft do not comply with U.S. union rules on regional jet use.

The labour union scope clause governs what planes pilots can fly, restricting planes heavier than 86,000 pounds (39,000kg) and with more than 76 seats from being flown on regional routes.

"When we established our contract with TSH, the outlook on the regional market was very different. The scope clause, however was not relaxed as anticipated," Mitsubishi Aircraft president, Hisakazu Mizutani, said in a statement.

The TSH cancellation leaves the Japanese planemaker with only 163 firm orders, and will be a fresh blow to Japan's ambition to establish an independent aircraft industry unless Mitsubishi Aircraft can persuade TSH and other U.S customers to switch to its SpaceJet M100, a revamped version of the aircraft that will comply with the U.S. union rule.

"We expect to convert all U.S. orders to the SpaceJet M100," a Mitsubishi Aircraft spokesman told Reuters. The company said it is continuing discussions with TSH.

With an order for 100 SpaceJet M90s with options for 100 more, SkyWest Inc is the biggest customer that Mitsubishi needs to switch over.

In September, regional U.S. airline operator Mesa Airlines Inc signed a memorandum of understanding (MOU) with Mitsubishi Aircraft to begin talks on purchase of 50 SpaceJet M100 aircraft from 2024 and an option for 50 additional aircraft.

The M100 will have up to 76 seats in a typical U.S. cabin configuration rather than an earlier 69 seat configuration.

Mitsubishi's bid to persuade its U.S. customers to switch to the M100 comes as it also struggles to secure certification for the SpaceJet M90 in time to ship the first aircraft to Japan's largest airline, ANA Holdings Inc by a mid-2020 target date.

That delivery may be pushed back for a sixth time, however, as aircraft construction and certification falls behind schedule, according to local media.

"It is true that the build for the (M90) certification aircraft is taking longer than planned, and at this moment we are looking at how we will adjust our schedule," Seiji Izumisawa, the CEO of the aircraft makers parent company, Mitsubishi Heavy Industries (MHI), said at earnings briefing in Tokyo.

MHI has agreed to buy rival Bombardier Inc's money-losing regional jet programme, which gives its regional aircraft unit a global maintenance and support base that could aid with SpaceJet sales. (Reporting by Tim Kelly. Editing by Lincoln Feast)