Analysis: Boeing's JAL loss may bring work back to the U.S
By Alwyn Scott and Tim Kelly
NEW YORK/TOKYO (Reuters) - Boeing Co's (BA.N: Quote) loss of a major Japanese airplane order to rival Airbus EAD.PA this week may produce a surprise U.S. benefit - bringing aerospace work home to U.S. companies.
Over the past 50 years, Boeing has increasingly outsourced large airplane pieces such as wings and fuselage sections. Its partnerships with Japanese companies carried the understanding that Japanese airlines would keep buying Boeing planes. The virtuous circle gave work to Japan's heavy industrial companies and helped Boeing keep Airbus largely out of the Japanese market.
But on Monday, Japan Airlines Co Ltd (9201.T: Quote) appeared to shatter the alliance by ordering 31 Airbus A350s to replace 31 Boeing 777s that it will retire this decade.
The $9.5 billion JAL deal is considered by some industry experts as likely to prompt Boeing to award less supply work to Japan in the future. Boeing would send that work to other countries, including the United States.
Japanese airlines were big buyers of Boeing's 787 Dreamliner, which helped justify the large investments Japanese companies made to set up production of major components, said Ron Epstein, an analyst at Bank of America Merrill Lynch.
The 777X, the next generation of Boeing's popular widebody jet, is supposed to have its design and building launch this year and enter service by 2020.
The 787 Dreamliner is the company's latest state-of-the-art widebody aircraft. It has been in service for two years but has encountered numerous technical problems.
Since Japan airlines are so far not big buyers of the 777X, "why would industrial policy follow the same plan?" Epstein said. Continued...