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Several international press reports today indicate that Japan Air Lines is about to break its all-Boeing fleet and order aircraft from Airbus. Reuters is reporting that the order will be for 20 Airbus A350 -1000 aircraft with an order valued at $4.3 billion at list prices. These aircraft will replace Boeing 777 aircraft currently in its fleet.


Given the traditionally strong, and nearly exclusive relationship between Boeing and JAL for wide body airliners in recent years, and the penchant of JAL to historically buy American, this appears to be another major breakthrough for Airbus.   Airbus has been seeking a relationship with the major carriers in Japan, unsuccessfully, for the last two decades. This appears to be a major breakthrough for Airbus, providing the platform they have been seeking to generate further market growth.


The question now is whether this order is something that would have occurred anyway in the routine order of business, or whether this may be a rebuke to Boeing by JAL as a result of problems with the 787 and how Boeing has handled those problems, specifically in Japan. We know that confidence in the 787, both from airline and consumer preference perspectives, has been negatively impacted by the recent grounding.

Could this also be a reaction to the current negotiations with Boeing over compensation? Industry rumors that Boeing’s offer was much lower than the Japanese expected could also be a potential factor in the JAL decision process.  When a longstanding customer takes his business elsewhere, the key is finding the reason behind the move.  While the A350-1000 is likely to be an excellent airplane, Boeing would likely have countered with 777-X as a 777 replacement in discussions with JAL.  Could Airbus have purchased an order with low pricing?  While Airbus has been discounting A330s in competition with the 787, we have seen no need for Airbus to heavily discount the A350, as the aircraft has strong demand.

Clearly, this is a huge potential win for Airbus, and a significant blow to Boeing, who have benefited by significant Japanese content on their aircraft with major orders from ANA and JAL. The question now moves to the longer-term relationships.  If outsourcing content to Japan will no longer result in orders, will Boeing reconsider its supply chain for 777-X and future 787 models, or bring some work back in house?

There were several reasons Boeing held its press conference to announce the 787 battery fix in Japan. This order may be the first indication of how the continuing 787 problems will impact Boeing with key customers.

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