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.
Might be like Ryan air talking to other OEM’s and then ordering 175 Boeing 737’s. A little pressure on Boeing to sweeten the deal. Seems like loyalty is slipping away even further in big business. I’ll believe it when the papers are signed. Boeing will do what they can to keep a long time customer like JAL in their camp.
Good point Steve! Also, A350-1000 has no true competitor at its size apart from the 777-300ER which is an earlier generation of technology. The 777-9X will be quite a bit larger than both aircraft and will not be available until the end of the decade. Boeing is known for sticking to their pricing, especially for their most successful widebody with a huge backlog. I would not be at all surprised if JAL is just working Boeing for a better price on the -300ER. There is certainly more risk in the A350 program than with the proven 777 design. JAL is now very familiar with those risks as an early 787 customer.
If I was Boeing I would be very careful the way I threat JAL, ANA, JCAB, JTSB and MLIT. The least W. James McNerney, Jr should do is go to Japan and pay respects to all involved with Boeing. It would help the present situation and future business.
According to Cathy, they got rock bottom prices for their 359s & 1000s.
Also, this lack of confidence can go both ways. The battery problem was essentially Japan’s, like the Sony computer batteries that over heated several years ago.
I believe airbus gets many of its orders by giving huge discounts. It adds to the amount of frames in service which leads to keeping production lines going and adding to the lucrative replacement parts business.
I am quite sure the A350 will see some teething pains and customers will see delays in delivery and hiccups on planes in service.
Considering that the 787 is a new plane in many respects, the battery problem while serious in nature and I am sure a remedy will be found, its entry has been quite good.without a laundry list of problems. But considering the plane was 5 years late, Boeing must have done some things right.
JAL and ANA should buy the best availanle for their needs. Without being steered by WWII heritages and national trade deficits.There should be a free market situation.
The battery problem seems to be much more an abuse in use problem than anything else.
The battery is the indicator but not the cause.
The 787 already had continuous issues in use all around.
Taking the published flight hours and available “plane-days” I get ~4.5 flight hours per day.
( The A380 after 20month was at 13+ hours/day )
for the japanese carriers the battery issue and the way Boeing handled it probably was the final straw that broke the camels back. Ordering A350 is more like divorce papers handed to Boeing.