Japan Airlines buys 31 A350 jets from Airbus
Airbus has signed a contract with Japan Airlines to deliver 31 passenger jets, the first major agreement by a Japanese airline to buy planes from a company other than Boeing. The long-range, wide-body A350 jets that JAL is buying have a list value of about $9.5 billion, although some analysts think that Airbus might have offered JAL a discount, according to the Associated Press:
Will Horton, senior analyst at CAPA Centre for Aviation, thinks JAL likely got a good discount from Airbus, which has been eager to break into the tough Japanese market.
“They may have been sold at cost, or below cost,” he said.
JAL has wanted an aircraft like the A350, which is smaller than Boeing’s 747 jumbo jets but slightly bigger than the 787, Horton said.
London-based aerospace analyst Howard Wheeldon said the motivation behind the deal was probably not just price. He said JAL appears to be copying the strategy of other airlines like British Airways and United Airlines in operating a mixed fleet.
“This is a great day for Airbus and one that is the result of a huge amount of effort,” Wheeldon said. “But while Boeing may be disappointed to see that their big European competitor has made a big dent into a one of its traditional customers, this does not in my view signal anything other than a desire by JAL to operate a mixed fleet of the best available aircraft in the world.”
Behind the domination of Chicago-based Boeing Co. are the historical ties between Japan and the U.S., including security arrangements. But in recent years, other Japanese carriers, especially newer low-cost airlines, have been gradually switching to Airbus. Associated Press
Other analysts noted the mechanical problems with Boeing’s 787 Dreamliner, although JAL representatives insisted those problems did not affect the company’s decision:
In the JAL deal, the A350 was competing against Boeing’s still-to-be-launched 777X, an update of its popular 777 widebody plane. The updated model “should have been launched long ago,” according to Aboulafia. “A key customer like Japan would have been inclined to let Boeing be slow and passive if it weren’t for the 787 experience, which has been a disaster. This is a day that really shouldn’t have happened.”
No question it’s a deeply humiliating blow for Boeing, but it’s far from being a knockout punch. Airbus was bound to break into the Japanese market sooner or later, as major airlines increasingly are splitting their orders between the two manufacturers to take advantage of price discounts, says Robert Stallard, an aerospace analyst at RBC Capital Markets in New York. Businessweek
Growing demand in Asian countries presents Airbus as well as Boeing with important opportunities:
Airbus and Boeing have been jousting for global leadership for years, with Boeing regaining the top spot in orders last year for the first time in a decade. Airbus long ago pushed into other Asian markets like China. But Japan, where Boeing has been firmly entrenched since the end of World War II, has remained unusually loyal to the American company. JAL had never bought a plane from Airbus, and JAL’s main domestic rival, All Nippon Airways, operates mostly Boeing jets. . . .
Japan is the second-largest air travel market in Asia behind China, although China is growing faster. Boeing has 428 passenger and cargo planes in service in the country, compared with 61 for Airbus, according to Ascend, an aviation consulting firm. In China, by contrast, the two manufacturers are neck and neck, with more than 950 planes each in operation.
Airbus and Boeing expect the Asia-Pacific market to yield 35 percent to 40 percent of all deliveries of new passenger planes over the next two decades. The bulk of those orders is expected to come from airlines in China, India and Southeast Asia, and most will likely be for smaller, single-aisle workhorses like the Airbus A320 and the Boeing 737, which airlines use on high-frequency routes over relatively short distances.
But Japanese carriers’ need for fuel-efficient, long-range jets like the Airbus A350, the Boeing 787 and a forthcoming stretch version of the Boeing 777 are expected to increase significantly in the next 20 years as growth in intercontinental traffic between Japan and the rest of the world far outpaces expected growth in the domestic market of less than 2 percent per year. The New York Times
Airbus is to deliver the new planes beginning in 2019.
See last week’s news in photos from around the world in the gallery below.