October 8, 2013 in Business

Japan Airlines orders from Airbus is blow to Boeing

Yuri Kageyama And Joshua Freed Associated Press
 
Associated Press photo

Airbus Japan Chief Executive Fabrice Bregier, left, and Japan Airlines President Yoshiharu Ueki attend a news conference in Tokyo on Monday.
(Full-size photo)

TOKYO – Usually when Japanese airlines need to buy a big plane, they go to Boeing. Not this time.

Japan Airlines ordered its first Airbus jets on Monday. It’s buying 31 A350s, the European plane maker’s new long-range, fuel-efficient jet. JAL also has an option to buy 25 more Airbus planes.

Monday’s deal is the first for the A350 in Japan and marks a big change in policy for JAL. Boeing had been the airline’s major supplier for decades and has dominated Japan’s aviation market during that span.

“If there’s one place Boeing could have regarded as a secure market, it was Japan,” said aerospace consultant Richard Aboulafia of the Teal Group.

The order is worth $9.5 billion at list prices, although discounts are common. Some analysts even think JAL may be getting the planes for below cost as Airbus looks to make inroads in Boeing’s domain.

The U.S. and Japan have been big trading partners since the end of World War II. And to strengthen its ties with Japanese airlines, Chicago-based Boeing has been shifting more and more work over the years to Japanese suppliers. About one-third of its new 787 is built in Japan.

Choosing suppliers that give Boeing “a market access advantage” is an “important consideration,” said Kent Fisher, Boeing’s supply chain chief, at a presentation in May. “We’re not going to shy away from that. That is an issue that we consider in the process, but it’s not the only issue.”

Boeing will have the right planes to compete with the A350, but it’s taking too long to finalize their designs so they can book firm orders, Aboulafia said. It plans updates for its large, long-haul 777 as well as a longer version of its new long-range 787, but neither design has been finalized to a point where Boeing can take orders.

Customers aren’t waiting.

“If this isn’t a wake-up call, why not just stay in bed, because you’ve just been hitting the snooze button over and over again,” Aboulafia said.

JAL and Japan’s other big airline, All Nippon Airways, both had to wait through long delays before Boeing delivered 787s in 2011. More 787s fly with Japanese airlines than anywhere else, so the impact of the 787’s grounding for battery problems this year was worst for the Japanese airlines.

But JAL President Yoshiharu Ueki said the grounding wasn’t a factor in buying the Airbus plane. He repeatedly said the long-range, twin-engine wide-body A350 was chosen because it was the “best match for our needs.”

Although ANA flies some smaller Airbus planes, the long-haul fleets at both airlines have been Boeing-only. Airbus has been eager to break into the Japanese market.

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