Thursday, June 12, 2014

Global Impact: Boeing Inks Deal with Japanese Firms, Emirates Orders 150 777X

According to The Associated Press, Boeing inked a deal on Thursday (June 12) with five Japanese companies to manufacture key components for its twin-aisle 777X jets, but the contract doesn't include the manufacturing of wings, which were a source of delays for the 787 Dreamliner.

The Japanese firms will represent 21% of the new plane's structural components, including fuselage sections and landing gear wells.

Difficulties in fitting the wings to the body of Boeing's 777X Dreamliner in the US contributed to delays during the manufacturing of the aircraft. 

The Japanese firms will provide 35% of the 787, which was the first Boeing plane to have a wing designed and built by a foreign company. Deliveries were delayed for about three years because of various issues.

Boeing Commercial Airplanes President and CEO Ray Conner said having the Japanese firms produce more components for the 777X was considered, but the decision was to have Boeing produce the wings.

COMMENT: "This is a partnership that will endure for many, many years to come," Conner said after Boeing, Mitsubishi Heavy Industries, Kawasaki Heavy Industries, Fuji Heavy Industries, ShinMaywa Industries and NIPPI Corp. signed the deal Thursday at a Tokyo hotel.

Twenty-one percent is the same level Japanese manufacturers received for predecessor 777 aircraft, one of the most popular commercial jets on the market today.

The Japanese consortium said the contract was a reflection of their reputation for quality production and punctual deliveries.

The 777X, scheduled for delivery from 2020, is billed as being 12% more fuel efficient than rival Airbus's A350.

Boeing already has 260 orders for the 777X, including an order from Japan's All Nippon Airways. Japan Airlines, which has had a long relationship with Boeing, has not placed orders as yet. 

ANA was the first customer for Boeing's 787 and JAL also purchased the airliner.

In 2013, JAL spurned Boeing and ordered from Airbus for the first time with a deal for 31 A350 planes worth $9.5 billion at list prices.

Even after delivery, the 787 was plagued with problems including batteries that were prone igniting fires. Boeing has said it dealt with that problem by encasing the batteries to contain any overheating.

Earlier this week, Emirates Airlines cancelled its order for 70 A350 aircraft, the European maker's answer to the domination of the 777 and 787. The A350 has also been plagued by delays. Emirates then ordered 150 777X jets.

The 777X variants include the 777-8X, whose list price is $349.8 million and carries up to 350 passengers. The list price for the 400-passenger 777-9X is $377.2 million.

The partnership declined to disclose the monetary terms of Thursday's deal, presumably because of the fierce competition between Boeing and Airbus.