In blow to Boeing, Japan Airlines makes deal to buy from Airbus


Yoshiharu Ueki (R), president of Japan Airlines and Fabrice Bregier, president and chief executive of Airbus S.A.S. announce their purchase agreement at a joint news conference in Tokyo. (Kimimasa Mayama/European Pressphoto Agency)
October 7, 2013

Japan Airlines signed an agreement Monday to buy aircraft from European maker Airbus, snapping the near-
monopoly that Boeing has enjoyed in Japan for more than a half-century.

Chicago-based Boeing has a fierce global rivalry with Airbus. The decision by JAL to buy 31 Airbus A350 wide-body jets is particularly jarring because of how secure Boeing’s foothold in Japan had seemed, analysts said.

But Boeing’s continued problems delivering its 787 Dreamliner as promised has dented the company’s credibility with major air carriers, said Richard Aboulafia, a longtime industry analyst with the Teal Group.

The promise of planes such as the Airbus 350 and Boeing’s 787 and 777X — an updated version of the popular 777 — is that they can carry more passengers with greater fuel efficiency. Carriers feeling pressure to keep fuel prices down are agitating for next-generation planes, and picking the right aircraft maker is a high-stakes business — a plane that has delivery delays could hurt profits and help competitors.

Analysts said Boeing’s loss of the Japan Airlines deal seemed largely self-
inflicted. Boeing’s 787 Dreamliner has been beset with delays in development and high-profile battery problems. In January, a Dreamliner operated by JAL had an electrical fire while parked at Logan International Airport in Boston.

Also that month, the Federal Aviation Administration grounded six new Dreamliners flown by United Airlines because of concerns about overheating batteries on the planes. In Japan, ANA and Japan Airlines also grounded their Dreamliners.

Aboulafia said Boeing has been cutting costs on engineering to raise its stock price, rather than focusing on delivering its planes on time.

There have been other signs of Airbus's encroachment on the wide-body-jet market. In recent months, Cathay Pacific and International Airlines Group, parent of British Airlines, have placed orders for Airbus 350s.

“People did see this coming,” Aboulafia said. “You can mess around for a year or two, that’s fine. You’re going to lose a couple people. You lost Cathay Pacific. You lost IAG. Whatever you do, don’t lose Japan.”

Aboulafia said that with JAL making the move, other Japanese carriers could follow.

“Boeing does have a very good product mix,” Aboulafia said. “It’s not a product issue, it’s a management issue.”

Boeing’s stock dipped 0.4 percent, while Airbus parent European Aeronautic, Defence & Space rose more than 2 percent in Paris. Boeing did not respond to a request for comment.

“It fills us with pride to see a leading Japanese airline start a new chapter with us,” Fabrice Brégier, Airbus president and chief executive, said in a statement. “This highlights a very bright and flourishing future for both of us, JAL and Airbus.”

Jia Lynn Yang is a staff writer at The Washington Post who covers policy and business. Before joining the Post, she worked at Fortune magazine.
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