ANA spends $16.6 billion on jets

ANA Holdings, Japan’s largest airline, split a ¥1.7 trillion ($16.6 billion) order for new aircraft between Boeing and Airbus Group in the biggest purchase in the carrier’s history.

By Andrea Rothman, Chris Cooper And Kiyotaka Matsuda (Bloomberg)

Published: Fri 28 Mar 2014, 9:51 PM

Last updated: Fri 3 Apr 2015, 5:08 PM

ANA agreed to buy 40 aircraft from Boeing and 30 planes from Airbus, the Tokyo-based airline said in a statement on Thursday. The jets will be delivered between fiscal year 2016 and 2027, according to the statement. The purchases, approved by the board on Thursday, will help increase the carrier’s fleet to 250 planes.

The orders are significant for Boeing after losing a $9.5 billion deal by Japan Airlines to Airbus last year that enabled the European company to gain a foothold in Japan, where the US planemaker has had a near-monopoly since World War II. The order from ANA will help Airbus move towards a goal of doubling its market share in Japan by 2020.

“It’s probably important to Boeing that what was a fortress market for them has now been breached,” said Timothy Ross, a Singapore-based transportation analyst at Credit Suisse Group. “No airframe manufacturer should have 100 per cent of any country.”

From Boeing, the carrier agreed to buy 20 777-9X, 14 787-9 and six 777-300ER planes, to be delivered between 2017 and 2027, giving the Chicago-based planemaker orders for ¥1.36 trillion. The purchase of additional 787s will increase the company’s fleet of Dreamliners to 80, confirming ANA as the world’s biggest operator of Boeing’s marquee jet.

ANA and Boeing have a “long and successful” partnership that spans more than five decades, Ray Conner, the manufacturer’s commercial airplanes president, said in a statement.

The airline is buying seven A320neo models and 23 A321neo planes from Airbus, cumulatively worth ¥366 billion in list prices. Deliveries will be between 2016 and 2023. Planemakers typically offer discounts to customers when making large purchases.

“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.”

Shares of ANA were unchanged at ¥220 in Tokyo trading on Thursday. The stock has gained 4.8 per cent this year.

Buying the Neos would be ANA’s first from Airbus since purchasing A320 single-aisle aircraft in the 1990s. The Tokyo-based airline needed a replacement for its A320s that it uses domestically and has been considering a replacement for aging widebody 777-300s used on international routes.

ANA had 198 Boeing jets, or 84 per cent of its fleet of 236 planes, as of March 24, compared with just 16 Airbus A320s.

JAL, Japan’s second-largest carrier, last year announced its first-ever order for Airbus planes in a $9.5 billion deal. The carrier ordered 18 twin-aisle A350-900 aircraft and 13 larger A350-1000s, plus options for 25 more jets.

Airbus chief executive Fabrice Bregier has said the France-based manufacturer’s planes will make up 25 per cent of Japanese airline fleets by 2020. Boeing has dominated the Japanese aviation market for half a century, making it a last bastion in an industry otherwise marked by a balanced duopoly between the European and US planemakers.

“What this shows is that Airbus is making headway in Japan,” said Shukor Yusof, an analyst at the Singapore-based equity arm of Standard & Poor’s. “The next step would be to win wide-bodies order from ANA.”

Both ANA and JAL were early customers of Boeing’s 787 Dreamliner, which was delayed more than three years and grounded globally for three months last year after batteries smoldered on two of the Japanese airlines’ jets.

The 777X, unveiled in November amid a $100-billion order blitz, is the first twin-engine plane with range and payload comparable to a four-engine jumbo. Boeing says the larger version, the -9X, will be 12 per cent more efficient than the A350-1000.

For decades, Chicago-based Boeing claimed a fortress-like grip on the Japanese market as plane sales matched the increasing role that local manufacturers played in its aircraft supply chain.

“Boeing was obviously eager to retain ANA while Airbus wanted to make some inroads,” said Will Horton, a Hong Kong-based analyst at the CAPA Centre for Aviation. “This is an incremental gain for Airbus.”

Japanese companies designed and supplied 35 per cent of the structure of the 787, with Mitsubishi Heavy Industries making the wings, and Kawasaki Heavy Industries and Fuji Heavy Industries assembling a front fuselage section and centre wing boxes.

Boeing is increasing work in the US with its latest 777, which is set to reach the market by the end of the decade. Boeing said in January it would manufacture the jet’s all-composite wing near its Seattle-area commercial hub, in exchange for union concessions guaranteeing labor peace through 2024.

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