Japan Airlines Orders Its First Airbus

Airbus A380

Even Boeing now admits the 787 Deamliner’s mechanical snafus are more than just bad publicity. Japan Airlines, a staunch Boeing loyalist, yesterday signed a $9.5 billion (list price) deal for 31 wide-body Airbus A350 jets. Also on the table is the option for another 25 A350s.

This was a tough and gutsy call by JAL, considering that Japan has a thriving aerospace industry built on being subcontractors for Boeing. One third of the 787 is built in Japan.

For Airbus, it was their largest order for the A350 this year and the largest ever from a Japanese airline.

And it’s not over. JAL’s rival, All Nippon Airways, also is in the market for about 25 new long-haul aircraft to replace its Boeing 777s. On the table for consideration is Boeing’s 777X. But will the Land of the Rising Sun become the Land of Rising Airbus aircraft?

Boeing’s market share in Japan has been around 80 percent, a level that’s been maintained mostly because of links between parts suppliers and cozy politicians. The company dates back to the post-war building of Japan.

ANA was the first to fly the Dreamliner and one of the airlines most affected by its long delivery delays.

Analysts, and Boeing themselves, suggest a price has been paid for the “troubled debut of its 787 Dreamliner,” Reuters reports.

“This is a huge win for Airbus and a big loss for Boeing,” an aerospace analyst based in Seattle told Reuters. “Airbus has been trying to break the wide-body monopoly of Boeing for decades and likewise Boeing has been wanting to keep Airbus out of JAL and ANA.”

The JAL fleet should see the first arrivals of the new, 250-to-350-passenger A350s next year, but suggest it will not be until 2019 when they “start using the plane.”

News of the JAL purchase was announced at a gathering of aviation financers in Spain. “It’s a heartbreak,” Kostya Zolotusky, managing director of Boeing Capital Corp, told the gathering. “We recognize that we made it very challenging for them in introducing 787 and will work to correct that,” he said.

Reuters also report that the “French Foreign Minister Laurent Fabius said significant European diplomatic efforts had gone into winning the deal.”

Regarding the $9.5 billion list-price deal, “industry analysts said it would be typical to secure generous discounts in such a groundbreaking deal.”

“This is seriously bad for Boeing. They need to do a little soul searching,” Richard Aboulafia, an airline analyst with the Virginia-based Teal Group, told Reuters. The 787 problems “inevitably led to doubts about execution, resources and time”.

The Tarmac’s View:  It’s hard to believe that JAL’s Airbus order is a direct result of the Dreamliner’s “teething Problems.” More likely it was an opening for JAL to loosen a knot with Japan’s Boeing-based aerospace industry and seek competitive pricing by playing Airbus against Boeing. And perhaps more importantly, JAL struck back at political leaders who recently awarded ANA more gates at Haneda airport.

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