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JAL May Turn to Airbus After Boeing 787 Delay

Japan Airlines is considering buying Airbus midsize A350 XWB planes in the wake of production delays on Boeing's new 787 Dreamliner, two company sources told Reuters.

Boeing's Dreamliner 787.
Jim Anderson
Boeing's Dreamliner 787.

Boeing faces increasing customer ire after announcing last month a second delay for the 787, pushing first deliveries back to early 2009. The industry has been watching to see if any airlines would switch to Airbus.

JAL, one of Boeing's most loyal customers, had planned to buy 35 Dreamliners with an option to buy a further 20, hoping to cut costs on parts replacement, maintenance and pilot training by focusing its resources on one aircraft.

But JAL's loyalty may be waning.

"The risk of procuring from one firm for our next-generation planes is large. We should procure from more than one," said a JAL executive who spoke on condition of anonymity.

The sources did not say how many planes JAL might buy from Airbus, a unit of European aerospace company EADS.

"We have always been studying our prospective fleet, including but not exclusively the A350. But nothing has been decided," JAL spokesman Hisanori Iizuka said.

Boeing's delays have added to the hurdles facing JAL, which lost more than 63 billion yen ($587 million) in the last two business years, hit particularly hard by high oil prices because of its ageing fleet.

The airline embarked on sweeping restructuring last year focused on renewing its fleet with smaller planes like the 787 to improve fuel efficiency, reducing jobs, overhauling its pension system and selling non-core assets.

JAL is also planning to raise about 150 billion yen in fresh capital and is under pressure to boost shareholder returns.

"It shows the firm has begun seriously weighing the pros and cons of single and multiple sourcing," said Hajime Hitotsuyanagi, an analyst at Daiwa Institute of Research. "Single sourcing would be cheaper if delivery is on schedule or earlier, but the company may have started considering other options given the delay in the production schedule," he said.

Boeing, the world's top aircraft maker, was not able to say if the latest delay, which it attributed to issues with suppliers, would be the final one.

Airlines have so far ordered 857 of the 787 planes, worth $140 billion at list prices, and some are seeking compensation for the postponement.

Japan's All Nippon Airways -- due to be the first to take delivery of the aircraft -- Australia's Qantas, and Air India have said they will consider seeking compensation, which could cost Boeing billions of dollars.

Shares of Japan Airlines closed Friday down 0.8 percent at 256 yen.

The benchmark Nikkei average fell 1.4 percent.

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