Japan politics looms over ANAs choice between Airbus, Boeing The deal, worth $9.5 billion (5.9 billion pounds) at list prices, was a major blow for Boeing, which holds more than 80 percent of Japans commercial-aviation market and has been intertwined with U.S-Japan diplomatic relations since shortly after World War Two. 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 and a person close to the airline - was just as momentous. For weeks the deal, initially a draft document, had been the most closely held secret in the aerospace business. Now, JALs 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 coming months is to make a similar decision on replacing its ageing Boeing long-haul fleet with more fuel-efficient planes. JALs October 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, Airbuss first mostly carbon-composite jetliner, in preference to Boeings 777X, for the same business reasons that JAL did. ANAs decision is expected by early 2014. But shifting political allegiances following JALs bankruptcy three years ago, which brought a change in company leadership, have meant that the flag carrier is no longer under the same government sway that has 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 Japans talks on a free trade deal with the European Union, which Airbus executives believe could exert a countervailing influence in its favour. The government says it is completely hands-off - as World Trade Organization rules demand. Sources with both planemakers however accuse the other of wheeling out diplomatic support. JALs choice of Airbus was a private decision made by a private company, and the government has absolutely no connection to it, Chief Cabinet Secretary Yoshihide Suga said on Tuesday. The various airline companies make their decisions on what to buy based on their own management situations. For decades JAL saw itself as Japans elite airline, what one person with many years experience in U.S.-Japan business and governmental affairs called an appendage of the Japanese government. ANA was the also-ran, a one-time helicopter service operator that only made its push into international flights in the 1980s. Boeing dominates the Japanese market partly because of the close U.S.-Japan security and diplomatic alliance. It also shares the building work widely in Japan, with companies such as Mitsubishi Heavy Industries Ltd and Kawasaki Heavy Industries Ltd making as much of the 787 Dreamliner airframe as Boeing itself does. A Boeing spokesman said in an emailed statement that the company spent nearly $4 billion on goods and services in Japan in 2012, accounting for around 22,000 jobs or more than 40 percent of the countrys aerospace workforce. Boeing and Japan are one, the then-president of Boeing Japan told U.S. officials in 2008, while the company was lobbying successfully for ANA to buy its jets, according to an embassy cable to Washington published by Wikileaks. In the past, there was pressure by government at the highest levels to buy Boeing, said the U.S.-Japan source. That relationship changed during the long-ruling Liberal Democratic Partys rare spell in opposition between 2009 and 2012. ANA continued assiduously to court LDP lawmakers, who felt abandoned by JAL executives, people familiar with the process say. In 2010 JAL collapsed into bankruptcy and was put through a $3.5 billion taxpayer rescue by the Democratic Party of Japan, which brought with it a new CEO appointed by the government. When Prime Minister Shinzo Abe led the LDP back to power last December, regaining the role the party has held for almost all of the past 60 years, JAL was now seen as the airline of the opposition and ANA enjoyed official favour. ANA denied it was coming under political pressure to buy Boeing. There is nothing of the sort, a spokesman for the company said. *reuters
Posted on: Tue, 22 Oct 2013 13:55:42 +0000
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