Airbus announced Monday that it has won a $9.5 billion order from Japan Airlines Co Ltd (TYO:9201). The European aircraft maker will supply 31 wide-body planes, 13 A350-1000s and 18 A350-900 aircraft, to the Japanese carrier. Japan Airlines Co Ltd (TYO:9201) has the option to order 25 more planes. The new aircraft will enter service in 2019.
Airbus gains foothold in Japan
It’s the first major deal for Airbus in Japan. It won the contract after a fierce competition with Boeing Company (NYSE:BA). The American plane maker said it is disappointed at losing the contract, but respects Japan Airlines Co Ltd (TYO:9201)’s decision. Another Japanese carrier ANA Holdings Inc (OTCMKTS:ALNPY) (TYO:9202) also plans to order dozens of wide-body planes. ANA Holdings Inc (OTCMKTS:ALNPY) (TYO:9202) said it will award the contract soon.
It was a big blow to The Boeing Company (NYSE:BA), which has more than 80% market share in Japan. The American company has been criticized for delaying its 787 Dreamliner by many years. Even after the Dreamliner entered service, it was grounded many times around the world due to technical issues. These recurring events prompted the Federal Aviation Administration to open an investigation into the issue. Experts say it tarnished the image of Boeing Company (NYSE:BA) and raised questions over its ability to deliver planes on time.
Tim Hepher and Tim Kelly of Reuters say that the delay and technical problems were the main reasons Japan Airlines avoided placing an order with Boeing Company (NYSE:BA). Airbus CEO Fabrice Bregier said he told Japan Airlines Co Ltd (TYO:9201) that Airbus has the best product the Japanese carrier can get. The Airbus A350 is 25% more fuel efficient than Boeing Company’s 787 Dreamliner. So, if ANA Holdings Inc (OTCMKTS:ALNPY) (TYO:9202) goes ahead with Boeing Company (NYSE:BA), it will have to explain why the American company is better.
Airbus, Boeing head-to-head
The global aviation industry has been hit hard by rising fuel prices and global economic slowdown. So, many carriers have started replacing their old planes with new, fuel efficient ones to slash expenses and maintain profitability. Before signing the deal with Japan Airlines Co Ltd (TYO:9201), Airbus has received orders for 725 planes. Despite their troubles and safety issues, The Boeing Company (NYSE:BA) also has orders for about 950 Dreamliners.
Shares of Airbus parent European Aeronautic, Defence & Space Co. jumped 2.17% to 50.30 euros in Paris. The stock is up more than 70% this year so far.