The aerospace industry is still reeling after Monday’s truly shocking announcement that Japan Airlines will buy 31 Airbus A350s worth $9.5 billion. It’s like Ichiro leaving for New York.
Here are some of the things being pondered by the aeropunditocracy:
Did Boeing’s problems with the 787 play a role in JAL’s decision? A Bloomberg News interview with Airbus Chief Executive Fabrice Bregierreveals that the timing of the grounding of Dreamliners earlier this year sure didn’t hurt his chances of closing a deal. But that story also explains that Airbus has been working very hard in recent years to understand and get to know Japanese airlines. And the A350 is a well-regarded product.
We’ll probably never know how lithium-ion battery problems in 787s flown by JAL and launch customer All Nippon Airways affected the JAL decision to buy Airbus — and that might be worse than knowing that they did.
Is Boeing’s catalog lacking? The Airbus A350 line has a passenger capacity of 250 to 400, which means it competes with the Boeing 787-9 and -10 and the 777-200. With the 787-9 entering service next year and the -10 in development, Boeing has an answer to the A350 on the low end. But the popular and profitable 777 line is overdue for a refresh, and the company has, by many accounts, dawdled in getting the 777X program launched, leaving an opening for the A350-900 and -1000, which Japan Airlines is buying. An official announcement of the 777X program isn’t expected until next month.
Writes influential analyst Richard Aboulafia of The Teal Group, who has been increasingly critical of Boeing: “Boeing hit the snooze bar on the alarm clock twice before the JAL loss. … Given the large industrial opportunities associated with a manufacturing role on the 777-X, and given that the 777-X family and 787-10 look ideal for Japanese needs, the A350XWB shouldn’t have been able to get its nose under the tent at all.”
And there’s a second shoe: ANA is the next Japanese customer up for grabs.
Does this affect where 777X work will be done? Here in Washington, we fear Boeing will assemble all or parts of the 777X somewhere besides Everett. After the JAL deal with Airbus, Reuters reports, Japan’s industries fear Boeing will assemble parts of the 777X in China or South Korea instead of Japan.
Here’s a crazy thought: Maybe Boeing will actually do more 777X work domestically than it did with the 787 to ensure there are no delays now that it’s chasing the Airbus A350. That doesn’t necessarily have to be Washington, of course.
AirInsight predicts that South Carolina will get the bulk of 777X work:
We understand from industry sources that, at this stage, it is unlikely that the 777X will be built in Everett, Washington. Potentially the aircraft would be produced in Charleston, South Carolina, where there is space for a major facility expansion. While no announcement has been made, we understand that a preliminary decision has been taken, but management will fully play the political game to gain as many additional incentives as possible from state and local governments before announcing their decision.
Should Boeing lose the ANA order, this could significantly impact decisions on outsourcing and component manufacturing locations for Boeing, and may be a positive for Seattle area employment, which will likely lose 777X assembly, but perhaps gain some 777X manufacturing initially planned for Japan.
How could this happen with a sales guy in charge? Ray Conner, the president and CEO of Boeing Commercial Airplanes in Renton, ascended from the top sales job. A Wall Street Journal story today profiles the new sales chief, John Wojick, and notes that Wojick is more customer-sensitive than Boeing’s sales culture has been in the past. Wojick once headed Asia-Pacific sales. So how could Boeing lose Japan Airlines with him and Conner in charge? The answer is that they are in a tough spot.
Writes the WSJ’s Jon Ostrower: “Pitching jetliners is among the toughest jobs in sales. Multibillion-dollar orders for big passenger aircraft can take years to nail down. The process requires patience and a deep understanding of the strategic needs of the airline in question. And it depends on product-development cycles that can last up to a decade. Airbus began test flights of the A350 in June. Boeing’s 777X is still five years away.”
As Aboulafia says in his scathing analysis, “The 777-X has a very bright future ahead. It’s starting life as a lost opportunity.”