$9.5bn Japanese Airbus deal takes off

Corks are undoubtedly a-popping at Airbus HQ in Toulouse this morning, after it sealed a $9.5bn deal with Japanese airline Japan Airlines to buy 31 of the company’s A350s, with an option to buy 25 more, should it feel so inclined.

It’s Airbus’ first-ever deal with JAL, whose 159-strong fleet is 70% Boeing, and its biggest with a Japanese airline: Boeing also makes up 81% of rival airline All Nippon’s (ANA to its friends) fleet. The order is also a turn-up for Rolls-Royce’s (aka the UK’s) books: it makes the Trent XWB engines that power the aircraft.

Things are not going well for Boeing, though: as one of the world’s biggest operators of the manufacturer’s Dreamliner model, which was grounded for two months earlier this year, JAL’s defection to Airbus is being seen as a punishment.

Added to the setback it had a fortnight ago, when South Korea put off plans to tender for an $8bn fighter jet contract, which Boeing was the favourite to win, its position in Asia is looking less comfortable than it was a year ago.

No wonder it sounded a bit dejected when it heard the news: ‘We have built a strong relationship over the last 50 years,’ a spokesman sighed.

‘We look to continue our partnership going forward.’
 
Airbus, on the other hand, is going great guns: over the past few months it’s announced $13bn of deals with Chinese airlines Qingdao and Zhejian Loong, Vietnamese carrier VietJet and Singapore Airlines.

Scott Hamilton, an aerospace analyst at Leeham Co, said the order is a ‘huge win for Airbus and a big loss for Boeing. Airbus has been trying to break the wide-body monopoly of Boeing for decades and likewise Boeing has been wanting to keep Airbus out of JAL and ANA.’

All eyes are now on ANA, which is looking to replace about 25 of its ageing Boeing 777s over the next few years. As margins are squeezed for airlines, many of them are looking to new, fuel-efficient models such as Boeing’s 777X, or Airbus’ A350, the first of which will be delivered next year.

The model ANA decides on will have wide-ranging connotations for whichever airline is left out. Sadly for Boeing, though, the signs look good for Airbus.