Boeing kept a firm grip on its biggest Japanese airline customer, with a massive order Thursday for 40 widebody jets from All Nippon Airways (ANA), valued at about $7 billion at estimated discount prices.
Rival Airbus had the consolation that ANA also ordered 30 of its smaller single-aisle jets, worth about $1.6 billion at estimated discount prices.
The order is a relief for Boeing after Japan’s other big carrier, Japan Airlines (JAL), defected to Airbus last fall. In the first big widebody-jet win for Airbus in Japan, JAL in October ordered Airbus A350s instead of the 787.
“I wouldn’t call this a split order,” Teal Group aerospace analyst Richard Aboulafia said of Thursday’s big ANA order. “Boeing won.”
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ANA chose the forthcoming Boeing 777-9X over the rival Airbus A350-1000, taking 20 of those large twin-jets.
And the airline doubled down on its earlier choice to be the launch customer for the 787 Dreamliner, ordering 14 of the new, larger 787-9 models.
In addition, ANA ordered six of the current 777-300ER planes, which will help Boeing bridge the 777 production gap before the 777X begins rolling out in Everett in 2020.
“They managed to stop ANA from following JAL in ordering A350s,” Aboulafia said. “By getting more aggressive on the 777 after dragging their heels, they managed to convince the Japanese that they’re serious about moving forward with a plane that has the Japanese market in mind.”
Airbus progress in Japan
From Airbus, ANA ordered seven of the A320neo model and 23 of its largest single-aisle A321neo, both of which feature new fuel-efficient engines from Pratt & Whitney.
For sure, this is significant progress for Airbus. ANA’s single-aisle fleet consists of 53 Boeing 737s and just 22 Airbus A320s.
The choice of the A320neo confirms that jet’s solid market advantage over Boeing’s 737 MAX.
However, in a separate order announced Thursday, JAL subsidiary Japan Transocean Air (JTA) said it ordered 12 of the current 737-800s, with flexibility to later switch some of those orders to the 737 MAX.
That order is valued at about $580 million at estimated discount prices.
More important, the ANA widebody order confirms Boeing’s emerging lead in the lucrative big-jet category. The order is a big vote of confidence both in Boeing’s upcoming 777X widebody and in its troubled 787 Dreamliner program.
As the biggest Dreamliner operator, ANA ratified its faith in a plane whose commercial debut with Japan’s largest carrier ran more than 3½ years behind schedule.
Last year, an overheated battery aboard an ANA 787 during a flight in Japan sparked a worldwide grounding of the Dreamliner fleet.
Yet this new order will eventually take ANA’s total fleet of Dreamliners to 80.
“Fact is, once we’re through the teething problems, it’s clearly the best aircraft at that particular size point,” said Nick Cunningham, a managing director at Agency Partners in London.
It may have helped that last week the Federal Aviation Administration in a joint report with Boeing declared the 787 safe and its reliability in service on a par with previous Boeing jets.
Despite its painful experience as the 787 launch customer, ANA isn’t shying away from taking early 777Xs. It will take its first 777X in 2021, within the first year of that new jet’s service.
Japanese manufacturing partners will likely supply all the 777X fuselage panels, as they do on the current 777.
On the 787, Japan makes more than a third of the airframe, with Mitsubishi supplying the wings, Fuji supplying the center wing box, and Kawasaki supplying a mid-fuselage section.
In the sales battle for ANA’s order, the plane-makers likely had to offer deep discounts.
“Airbus really wants to be in the Japan market and so will have offered discounts to secure their order,” said Ryota Himeno, an analyst at Barclays Securities Japan. “ANA will have negotiated with Boeing and played them off Airbus to get a cheaper price. They probably also got a discount for the problems with the 787 as well.”
The list price of the total order was about $17 billion, with about $13 billion going to Boeing and $4 billion to Airbus. The estimates of actual prices, showing Boeing with a $7 billion order and Airbus with $1.6 billion, were based on the latest pricing data from aircraft-valuation firm Avitas.
“Both aircraft-makers were very aggressive in their sales pitches,” ANA President Shinichiro Ito told reporters in Tokyo. “That helped us secure even better conditions.”
Airbus is still expanding its foothold in Japan, where Boeing has had a near-monopoly dating to the years after World War II. The ANA order will help Airbus move toward a goal of doubling its market share in Japan by 2020, to 25 percent.
“What was a fortress market for (Boeing) has now been breached,” said Timothy Ross, a Singapore-based transportation analyst at Credit Suisse. “No airframe manufacturer should have 100 percent of any country.”
Airbus planes use about $1 billion of parts and materials annually from manufacturing partners in Japan and, with an eye toward future inroads in the market, the company is seeking to expand its supplier base in the country.
This report includes information from Bloomberg News reporters Kyunghee Park in Singapore and Kiyotaka Matsuda in Tokyo, as well as Seattle Times aerospace reporter Dominic Gates.