Airbus could snatch up Boeing’s Japanese customers after Dreamliner chaos

Airbus SAS is in discussions with Japan’s two biggest carriers about an order for its A350-1000, a long-range plane aimed at eroding Boeing Co.’s dominance in wide-body aircraft, three people familiar with the talks said.

Negotiations with ANA Holdings Inc. and Japan Airlines Co. are advanced, and JAL may place an order by September to replace some of its older Boeing 777s, said two of the people, who asked not to be identified because talks are continuing. JAL, which has never bought Airbus aircraft, may purchase as many as 20 of the biggest A350 variant, one of the people said.

An order for Airbus’s newest model from Japan would mark a victory for the European planemaker in a market where Boeing has enjoyed near total hegemony for decades. Those ties were underpinned on the 787 Dreamliner, with more than a third of the structure built by Japanese suppliers. Boeing made JAL and ANA the first operators, only to see the premiere sour amid a months-long grounding of the fleet after batteries caught fire.

“An A350 order by JAL would be a disaster for Boeing,” said Richard Aboulafia, vice president of the Teal Group, a Fairfax, Virginia-based aerospace forecaster. “The Boeing- Japanese relationship is the longest and most important global relationship in aerospace history. If they really do choose an Airbus plane that would be a vote of no-confidence in Boeing.”

Three Variants

JAL looks at all types of aircraft, spokesman Kazunori Kidosaki said when asked about the talks. ANA hasn’t started discussing what plane it may buy after the current 777, spokeswoman Megumi Tezuka said. Stefan Schaffrath, a spokesman for Airbus in Toulouse, France, said the company doesn’t comment on discussions with existing or potential customers.

The first variant, the A350-900, will seat 314 and is set to enter service by late 2014, with the debut flight planned for mid-2013. A smaller variant, the A350-800 will follow in 2016, with the largest, the A350-1000, slated for late 2017.

Airbus says the A350-1000, which costs $332.1 million at list price, will offer 25 percent better operating economics than Boeing’s best-selling 777-300ER.

To counter the potential threat from Airbus, Boeing has begun marketing a successor to its 777, the 777X. Boeing first disclosed potential plans to offer a 777 replacement at the Paris Air Show in 2009. Four years later, Boeing has begun marketing the 777X though hasn’t yet committed to building the plane. Chief Executive Officer James McNerney has said Boeing expects to have the plane in service around the end of the decade.

Keep Waiting

ANA and JAL “are both 777 customers, but how long can you be expected to wait for the 777X” said Robert Mann, an aerospace consultant based in Port Washington, New York.

As of Dec. 31, JAL had 46 Boeing 777s in its fleet, while ANA had 52 777s as of the end of April, according to the companies’ websites.

While Airbus is on par with its rival globally, the European company has a market share of less than 5 percent in Japan, the world’s third-largest economy after the U.S. and China, and home to Haneda Airport, among the busiest globally.

Boeing’s stumbles on its 787 Dreamliner, which debuted three years behind schedule and was grounded for more than three months, may help Airbus win the endorsement of local subcontractors that have typically shunned the European company as the risky upstart.

Japanese companies designed and made 35 percent of the structure of the 787, with Mitsubishi Heavy Industries Ltd. supplying the wings and Kawasaki Heavy Industries Ltd. and Fuji Heavy Industries Ltd. building part of the front fuselage section and center wing boxes.

The record level of work for Japanese suppliers coincided with Japan’s airlines being among the Dreamliner’s top clients. ANA placed the first order for the model in 2004, for 50 planes, and JAL ordered 35.

Boeing hasn’t said yet whether it will ask Japanese companies to build the wing for the 777X or take that work back in house.

With assistance from Thomas Black in Dallas and Chris Cooper in Tokyo. Editors: Benedikt Kammel and Christopher Jasper.

To contact the reporter on this story: Andrea Rothman in Toulouse at [email protected]. To contact the editor responsible for this story: Benedikt Kammel at [email protected].