Airbus secures 31-jet order from Japan Airlines, ending Boeing's dominance

Japan Airlines to buy 31 jets in deal that breaks rival Boeing's dominance in Japan

PUBLISHED : Monday, 07 October, 2013, 3:15pm
UPDATED : Tuesday, 08 October, 2013, 1:58am

Airbus announced its first jet order from Japan Airlines (JAL) yesterday, breaking open the last big aviation market dominated by Boeing in a move that suggests the US company may pay for the troubled debut of its 787 Dreamliner.

The landmark deal for 31 wide-body A350 jets with a combined US$9.5 billion list price follows an intense battle between the planemakers, as JAL and domestic rival ANA seek dozens of new long-haul jets over the next decade.

The agreement, also a potential blow to a Japanese aerospace industry that builds large portions of Boeing's jets, includes options for another 25 A350s.

"This is a huge win for Airbus and a big loss for Boeing," said aerospace analyst Scott Hamilton, managing director of Seattle-based aviation consultancy Leeham. "Airbus has been trying to break the widebody monopoly of Boeing for decades and likewise Boeing has been wanting to keep Airbus out of JAL and ANA."

Boeing has for decades seen off attempts by the European planemaker to secure an order with JAL, benefiting from links with Japanese suppliers and deep political ties between Tokyo and Washington to maintain a market share of more than 80 per cent.

But industry experts said delays to Boeing's 787 Dreamliner and its subsequent grounding after its batteries overheated had tarnished Boeing's image and cast doubt on its ability to deliver aircraft on time.

At the same time, bureaucratic and political influence over fleet purchases by JAL, which the government bailed out in 2010, has waned since it went public again a year ago and the Democratic Party government that rescued it lost power.

Airbus also showed its readiness to move in on Boeing's turf in the Japanese aerospace industry, including co-operation in research and development.

"With this order, it gives us more momentum to look for potential joint R&D efforts for the future generation of aircraft," Airbus chief executive Fabrice Bregier told a joint news conference in Tokyo with JAL president Yoshiharu Ueki.

Ueki did not say what JAL would actually pay for the A350s, but industry analysts said it would be typical to secure generous discounts in such a groundbreaking deal.