Airbus has just finalized a deal according to which Japan Airlines will order a bevy of jets from the company. JAL will buy 31 A350 jets worth $9.5 billion. With this move, Airbus has entered a market that was once the home turf of Boeing.
Boeing had made a big mistake in particular with its 787 Dreamliner. The launch of this airliner before the public was marked by faults and foibles. Airbus took advantage of this chink in the armor. Meanwhile, Japan Airlines (JAL) and its indigenous competitor ANA Holdings Incorporated have gone on to order many jets and will continue to do so over the next decade.
The compact will upset the industry since until now Boeing parts were the only brand of aircraft components that got built. The deal was sealed on Monday and consists of 31 wide-body A350 jets with a price valued at $9.5 billion. There is a choice regarding the purchase of 25 more A350 jets.
The deal is a big stimulus for Airbus and a heavy loss for Boeing. Airbus had long looked at the market that Boeing had monopolized with hungry eyes. Now it has finally gotten a chance to break up that monopoly and it is doing the best it can to attract JAL and ANA Holdings Incorporated. The shares increased by 1.75%. As for the deliveries, they are expected in a year’s time.
An aerospace analyst, who is also MD of Seattle-based Leeham Co.,Scott Hamilton, said, "This 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."
JAL will begin employing the airplanes for their voyages, five years from now. The ties between the US and Japan had up until now secured Boeing some prosperity in its business with JAL. But the 787 Dreamliner was its Waterloo. That was where the tables were turned and Airbus got its lucky break.
According to Reuters, MD of Boeing Capital Corp, Kostya Zolotusky told aircraft financiers in Barcelona, "It's a heartbreak."
Airbus President Fabrice Bregier (L) and Japan Airlines (JAL) president Yoshiharu Ueki (R) Signed $9.5 billion Deal to buy 31 A350 Jets.