Japan's largest heavy machinery maker has spent several months sounding out airlines to see if there would be sufficient demand for the lightweight, fuel-efficient jet, which will hold 70-90 passengers and be used for shorter and mid-range routes.
The project won a vote of confidence on Thursday when All Nippon Airways Co said it would buy up to 25, the first carrier to commit publicly to the jet. Japan Airlines Corp has also said it was considering an order.
A subsidiary will be set up on April 1 to oversee the project. It will start out with capital of 3 billion yen and aim to increase that to 100 billion yen, two-thirds of which will be shouldered by Mitsubishi Heavy itself.
Mitsubishi Heavy said it would tap Toyota Motor Corp, trading houses Mitsui & Co, Mitsubishi Corp and Sumitomo Corp, and the state-owned Development Bank of Japan for the rest.
Mitsubishi Heavy said it hopes to have the jet in the air by 2013. The company has said in the past it would aim to sell 1,000 of the jets over the next 20 to 30 years, grabbing one-fifth of expected new demand in the market.
Pratt & Whitney, the jet engine unit of United Technologies Corp, will supply engines for the jet.
China and Russia are also looking to bolster their aviation industries with new regional jets.
Russia's United Aviation Co has teamed up with Boeing to build a new Superjet 100, which will carry 75 to 95 passengers, while China's AVIC I is building the country's first regional jet, the ARJ21.