JAL moves out from under Tokyo's influence

JAL moves out from under Tokyo's influence

TOKYO - When Japan Airlines Co broke with decades of tradition by buying long-haul jets from Europe's Airbus rather than US rival Boeing Co, it informed the Japanese government by e-mail without any prior warning.

The deal, worth US$9.5 billion (S$12 billion) at list prices, was a major blow for Boeing, which holds more than 80 per cent of Japan's commercial aviation market and has been intertwined with US-Japan diplomatic relations since shortly after World War II.

But the way JAL communicated the decision - with a curt message delivered to officials' inboxes just as it was publicly announcing the deal, according to Japanese government sources - was just as momentous.

For weeks, the deal had been the most closely held secret in the aerospace business. Now, JAL's decision to focus on cold business logic revealed a new distance between the national flag carrier and the Tokyo government.

It also sharpens the political implications of the choice facing rival ANA Holdings Inc, which in the coming months is to make a similar decision on replacing its ageing Boeing long-haul fleet with more fuel- efficient planes.

JAL's Oct 7 order for 31 wide-body A350 jets was a coup for Airbus, which had never directly sold a jet to the airline. Analysts say the chances have increased that All Nippon Airways will buy around 30 A350s, Airbus's first mostly carbon-composite jetliner, in preference to Boeing's 777X for the same business reasons that JAL did. ANA's decision is expected by early 2014.

Shifting political allegiances following JAL's bankruptcy three years ago, which brought a change in company leadership, meant the flag carrier is no longer under the same government sway that guided major aerospace decisions throughout the postwar period, say people close to both airlines.

ANA, by contrast, is now close to the ruling party, and may come under greater pressure to buy Boeing. The head of a prominent leasing company with links to both planemakers told Reuters ANA would probably select the 777X. The diplomatic picture is complicated by Japan's talks on a free trade deal with the European Union, which Airbus believes could exert a countervailing influence in its favour.

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