Japan Airlines orders 31 Airbus A350s in $12b deal

Japan Airlines orders 31 Airbus A350s in $12b deal

TOKYO - Japan Airlines said Monday it is ordering 31 Airbus A350 planes in a deal valued at $9.5 billion (S$12 billion) , challenging Boeing's dominance in the Japanese market as it struggles with the troubled Dreamliner.

The carrier said it had signed a purchase agreement for 18 long-haul A350-900s and 13 A350-1000s, with an option to buy another 25 aircraft.

The deal marks the first time JAL has bought Airbus planes with the slate of new aircraft expected to come into service from 2019, the carrier said, as it replaces its ageing Boeing fleet.

The deal was announced after markets closed but investors cheered reports of the purchase earlier Monday with JAL's Tokyo-listed shares closing 3.01 percent higher at 5,810 yen as the broader marker fell 1.22 percent.

The push by the European plane maker comes as JAL and domestic rival All Nippon Airways (ANA) - whose fleet is also dominated by Boeing - have been sideswiped by problems with the Dreamliner. The lightweight plane - hailed for its fuel-efficiency but marred by years of production delays - was grounded globally in January after lithium-ion batteries overheated on two different planes, with one of them catching fire while parked.

The Japanese carriers - the single biggest operators of the Dreamliner - have put their fleets back into service.

But they are seeking compensation from US-based Boeing of more than $200 million for the string of problems which forced them to cancel flights and took a bite out of their bottom line.

"Considering the recent troubles with the Dreamliner, JAL may have reached the conclusion that it wants to avoid the risks," said Mitsuru Miyazaki, senior analyst at Tokyo's SMBC Friend Research Center.

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