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Topic: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: phxa340
Posted 2013-02-24 20:46:19 and read 22434 times.

A JAL Chairman has stated that he is not keen on being 100% reliant on Boeing products and has been in discussions in the past to introduce a new supplier.

This would represent a historic shift with Japanese airlines as for the most part they have relied on Boeing as their sole supplier. I wonder if this is hot air from the 787 mess or if he genuinely wants to introduce A into the fleet.

This duplicates many Airlines thoughts like LH, UA, AA, QF etc that don't want to rely on either just B or A.

http://www.cnbc.com/id/100488815

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: PHX787
Posted 2013-02-24 20:57:04 and read 22408 times.

It's probably current hot air but it is quite understandable. Airlines these days are straying away from being all-A or all-B, either intentionally or through mergers. Remember for a while NH experimented with the A320....but i'm not sure how that fared from them (do they still have any?)

But with JL, the "reliance" on the 787 under this grounding should be treated as yet another delay. While crappy, we all must realize that the 787 is a completely new piece of technology...I will never see JL order the A350 or A330. They simply do not serve the roles that the 77W already fills for JL.

Plus, having a single supplier does make some things roll swimmingly- no need to train crews to completely different cockpit setups.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: DocLightning
Posted 2013-02-24 21:52:25 and read 22069 times.

It is a very stark sign of how the 787 debacle has killed Boeing's goodwill with customers.

But I think that the number of new airliners being ordered is such that there is room for a third supplier. I wonder if anyone will step up to the plate and start offering at least a 737/A320 competitor, if not a 787/A350 competitor. Lockheed-Martin? Embraer?

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: jetblueguy22
Posted 2013-02-24 22:08:21 and read 21920 times.

Quoting phxa340 (Thread starter):
I wonder if this is hot air from the 787 mess or if he genuinely wants to introduce A into the fleet.

I would think he would want to introduce Airbus to the fleet. I don't think any Chairman of a legitimate company would buy an aircraft because they are mad at their biggest supplier. They have to make it work in their fleet and route network. If they can do it, why not give it a try? Who knows they may like the aircraft even more.

Quoting PHX787 (Reply 1):
we all must realize that the 787 is a completely new piece of technology...

As a big 787 fan that is good and all, but there isn't an excuse for what is happening. Sure all new aircraft go through teething periods, but nothing like this. Delays are one thing, but to have it enter service and be a big part of the fleet, only to have it grounded, is not a good thing. Though one has to wonder, if they had A350s on order how would this be any different?

Quoting DocLightning (Reply 2):
I wonder if anyone will step up to the plate and start offering at least a 737/A320 competitor, if not a 787/A350 competitor. Lockheed-Martin? Embraer?

I think the most likely has to be Embraer. They seem to be the strongest regional aircraft producer at the moment. To jump from the E195 to a Boeing/Airbus type narrowbody probably wouldn't be that big of a leap. The question then becomes though, how good will the aircraft be, how will airlines with established fleets react to a completely different type than they already operate, and how will Boeing and Airbus react to someone stepping into their territory. Certainly some interesting things to consider.
Pat

[Edited 2013-02-24 22:21:58]

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: Lufthansa
Posted 2013-02-24 22:15:45 and read 21865 times.

he has raised a good point though.
In the past Japan was very much into relationships in who they did business with. But, that doesn't give anybody
any incentive to sharpen their pencils when its time to buy. And it would be a very very rare occurrence for a single
supplier to continuously for decades provide the best deal when asked every time. I think he is right to question it. He owes it to his companies stakeholders to extract the best possible deal for them. The chinese certainly know no such loyalty. I bet they got better deals too!

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: horstroad
Posted 2013-02-24 22:22:57 and read 21803 times.

Quoting Lufthansa (Reply 4):
To jump from the E195 to a Boeing/Airbus type narrowbody probably wouldn't be that big of a leap.

once you are successful in building airliners, is it that much of a bigger step to an aircraft five times the size of what you have built before than it is to an aircraft just twice the size? I could really imagine embraer designing a long haul twin aisle aircraft. only problem, as you mentioned, is to make the customers buy the product.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: columba
Posted 2013-02-24 22:24:40 and read 21794 times.

What could Airbus offer JAL that could be of interest for them now ? I doubt that they would add A330s to their fleet given their huge 767 and 777 fleet. A320NEOs ? A350s ? Or even A380s ?
Many airlines have decided for a mixed 787/A350 fleet.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: AeroWesty
Posted 2013-02-24 22:33:18 and read 21717 times.

Quoting phxa340 (Thread starter):
I wonder if this is hot air from the 787 mess or if he genuinely wants to introduce A into the fleet.

It's highly doubtful this is blowing hot air. The article quotes the chairman as saying:

Quote:

"In a normal market there is tremendous risk from relying on one vendor. In order to provide good products at good prices, at lower prices a dual vendor system is a must."

...

The JAL chairman said he was involved in discussions about introducing another vendor when the accident occurred in January.

The new chairman is looking at fleet purchases in purely business terms, which is his responsibility to do for the board and shareholders.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: flood
Posted 2013-02-24 22:36:54 and read 21687 times.

Quoting columba (Reply 6):
What could Airbus offer JAL that could be of interest for them now ?

Unfortunately it's a subscription article, posted sometime earlier in the week on flightglobal...

JAL to consider Airbus aircraft for 777 replacement:
Japan Airlines, which operates only Boeing widebody aircraft, will consider Airbus aircraft as a viable option to replace its older Boeing 777s.
http://www.flightglobal.com/news/art...rcraft-for-777-replacement-382514/

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: francoflier
Posted 2013-02-24 22:40:47 and read 21654 times.

It seems Japan's flag carriers unquestioned loyalty to Boeing has taken a hit.

Then again, being such invested and dedicated customers of the 787 and having to suffer the full blow of Boeing's bad luck/screwups will put any loyalty to the test.

They also knew they were the first customers and that there is always a risk in being that. They got the appropriate discount.

Quoting DocLightning (Reply 2):
Lockheed-Martin? Embraer?

If Airbus and Boeing, who have been designing and manufacturing airliners non stop for the last few decades, struggle to get any new design out without any major hiccup and risking bankruptcy, I can't imagine any of these would fare any better with less experience in the field. The 787 is really pointy-tip-of-the-spearhead stuff. Even Airbus remained more conservative with the A350 design.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: spacecadet
Posted 2013-02-24 22:41:15 and read 21654 times.

Quoting AeroWesty (Reply 7):
The new chairman is looking at fleet purchases in purely business terms, which is his responsibility to do for the board and shareholders.

On the other hand, the quote sounds a lot like a negotiation to me. Boeing's not going to be inclined to give their best price if they don't seriously think there's any competition for a contract.

Unless he thinks Boeing's about to go under, I don't see what "risk" there is in relying on one vendor. The only risk is in that vendor thinking you're a bunch of chumps and overcharging you.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: francoflier
Posted 2013-02-24 22:55:32 and read 21560 times.

Quoting spacecadet (Reply 10):
On the other hand, the quote sounds a lot like a negotiation to me.

A threat is only taken seriously if it is known to be real.

I doubt Airbus or Boeing go into negotiation in Japan not knowing what their respective chances exactly are. No matter what these airlines claim.
I think Airbus stood a better chance of selling KC-45s to the USAF than they do selling aircrafts to JAL and ANA. Everybody knows that and it probably skews the negotiations.

This exec is right, an Airbus order would, if anything else, shake both manufacturers up and help these 2 airlines be taken a little more seriously.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: BlueSky1976
Posted 2013-02-24 23:08:20 and read 21456 times.

Quoting PHX787 (Reply 1):
I will never see JL order the A350 or A330. They simply do not serve the roles that the 77W already fills for JL.

A350-900 is a perfect replacement for JAL's fleet of 777-200ERs.

Quoting columba (Reply 6):
What could Airbus offer JAL that could be of interest for them now ?

See above, please.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: TC957
Posted 2013-02-25 00:34:43 and read 21017 times.

I feel Airbus should be looking at developing a light-weight A350 suitable for domestic and short-haul operations. Potential must be there with not only the Japanese big two but for China and the Middle East markets too.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: sankaps
Posted 2013-02-25 00:44:01 and read 20948 times.

I completely agree with the JAL Chairman's comment. It is Procurement 101: Do not ever let a supplier believe you will choose no one else. Which is why I shook my head in disbelief back when Bethune declared an exclusive Boeing relationship for CO. You need to keep your suppliers honest! And you can never predict when needs and situations change.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: 777way
Posted 2013-02-25 00:49:23 and read 20892 times.

Quoting PHX787 (Reply 1):

They still have the 320s but rpobably on their way out, also JAS operated A300 which later went to JAL with merger and retained for almost ten years.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: PM
Posted 2013-02-25 01:11:02 and read 20590 times.

Quoting 777way (Reply 15):
JAS operated A300 which later went to JAL with merger and retained for almost ten years.

And I loved flying on them!   

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: BEG2IAH
Posted 2013-02-25 01:12:59 and read 20562 times.

I highly recommend this relevant summary: http://www.boeing.com/aboutus/intern...ackgrounders/japanbackgrounder.pdf

What's everyone's take on this: "Boeing-related work supports approximately 22,000 direct and indirect jobs in Japan, a figure equal to nearly 43 percent of Japan’s total aerospace-related employment."

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: sankaps
Posted 2013-02-25 01:27:16 and read 20349 times.

Quoting BEG2IAH (Reply 17):
What's everyone's take on this: "Boeing-related work supports approximately 22,000 direct and indirect jobs in Japan, a figure equal to nearly 43 percent of Japan’s total aerospace-related employment."

It should not have any impact on the fleet decisions of privately owned Japanese airlines. If it does (and that is how it appears), then it is a form of protectionism / unfair competition.

Airbus/EADS probably employs a larger proportion of Europe's aerospace-related workers, but I cant think of any major European airline that has a policy or practice of buying Airbus only.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: nrt1011
Posted 2013-02-25 02:22:33 and read 19606 times.

The Japan-US relationship is special and for the past 60+ years this has been a more important factor that price competitiveness. That being said, it is certainly against Procurement 101 as someone mentioned above. The future looks interesting for Japan Aviation but don't expect too much too soon. Japan moves at a glacial pace (I did live there for 8 years by the way)

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: ecbomberman
Posted 2013-02-25 02:31:29 and read 19482 times.

The Japanese are not into blowing hot air out of the blue. They are not attention grabbers... Trust me....

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: su184
Posted 2013-02-25 02:45:55 and read 19294 times.

Ummm, do I smell negotiations for new orders soon ( maybe 748i's ) and they want to get good concessions from Boeing based on 787 problems,,!!

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: motorhussy
Posted 2013-02-25 02:56:26 and read 19125 times.

Quoting sankaps (Reply 18):
It should not have any impact on the fleet decisions of privately owned Japanese airlines. If it does (and that is how it appears), then it is a form of protectionism / unfair competition.

Are any of the investors in JL and NH also investors in Japan's aerospace industry and, if so, do they supply Boeing?

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: flyglobal
Posted 2013-02-25 03:40:12 and read 18590 times.

Quoting BEG2IAH (Reply 17):
I highly recommend this relevant summary: http://www.boeing.com/aboutus/intern...ackgrounders/japanbackgrounder.pdf

What's everyone's take on this: "Boeing-related work supports approximately 22,000 direct and indirect jobs in Japan, a figure equal to nearly 43 percent of Japan’s total aerospace-related employment."



reading this shows that beyond discussions there will be a lot of lobby activities from Boeing along the line of challenging American - Japanese relations. For Boeing it is important to avoid that Airbus gets a foot in the door. Because we all know: Once a foot in the door, a whole body will follow.
We know from cats: where the head passes through, the whole cat will slip through.

Regards

Flyglobal

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: BlueShamu330s
Posted 2013-02-25 04:31:56 and read 17987 times.

From my limited experience with Japanese culture, I'd regard the Chairman's comments as typical of the Japanese way of 'getting the message' across with complete politeness whilst avoiding confrontation.

It does not apportion blame to anyone, anything or any particular circumstance, but the message is clear that JAL are incredibly not amused.

It is completely antithetical to the Akbar Al Baker style of Qatar; Gentlemens' Club compared to bar room brawling.

Quoting PHX787 (Reply 1):
While crappy, we all must realize that the 787 is a completely new piece of technology

Absolutely no excuse in this modern age. No excuse, whatsoever.

Quoting jetblueguy22 (Reply 3):
As a big 787 fan that is good and all, but there isn't an excuse for what is happening.

  

Quoting PHX787 (Reply 1):
I will never see JL order the A350 or A330. They simply do not serve the roles that the 77W already fills for JL.

I see the A359 as being a perfect slam dunk to replace the B772s.

Quoting spacecadet (Reply 10):
On the other hand, the quote sounds a lot like a negotiation to me.

It's just not the Japanese way of doing things; they simply wouldn't be what they would consider to be so disrepectful, IMO.

Quoting ecbomberman (Reply 20):

The Japanese are not into blowing hot air out of the blue. They are not attention grabbers... Trust me....

Totally agree; let's see if Akbar Al Baker now gets on the bandwagon to stir the pot a little more....

Rgds

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: LY777
Posted 2013-02-25 04:35:38 and read 18752 times.

Quoting sankaps (Reply 18):
Airbus/EADS probably employs a larger proportion of Europe's aerospace-related workers, but I cant think of any major European airline that has a policy or practice of buying Airbus only.

Are you joking?
IB, TP, LX, U2, EI, to name a few, have an all-Airbus fleet...
LH is also leaning towards an all-Airbus fleet (except their 748s) as they are about to phase out their 737s.
Same for AZ (except their 772s)

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: ktachiya
Posted 2013-02-25 04:39:05 and read 18575 times.

Quoting BlueSky1976 (Reply 12):

A350-900 is a perfect replacement for JAL's fleet of 777-200ERs

Really??? From the direction they are heading, it seems that they are in favour of giving more market share to ANA, the LCC's or even Skymark for int'l operations.

The new B773ER's being reconfigured only have about 230 seats or so, down from the current 272. It seems that they are searching for more acft the size of the A332 at the biggest, if not even smaller.

The once majestic airlines with so many B747's in their fleet seems like they are voluntarily shrinking.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: carpethead
Posted 2013-02-25 04:46:39 and read 18657 times.

Quoting columba (Reply 6):
What could Airbus offer JAL that could be of interest for them now ? I doubt that they would add A330s to their fleet given their huge 767 and 777 fleet. A320NEOs ? A350s ? Or even A380s ?

Other than a few old 763s, nothing needs replacing in the JAL fleet. Their entire narrowbody fleet is very new.
The early model 772s are still a few years away from replacement. Unless they want a small fleet of A330s, they should await a couple of more years, to decide on what shakes out of the 787 mess and if the A350 goes ahead on production as schedule.
Then again, Airbus may offer something unique like a lease on 10 or so A330s then trade in for a large A350 order to replace their entire 777 fleet.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: KL911
Posted 2013-02-25 05:07:41 and read 18306 times.

Quoting DocLightning (Reply 2):
But I think that the number of new airliners being ordered is such that there is room for a third supplier. I wonder if anyone will step up to the plate and start offering at least a 737/A320 competitor, if not a 787/A350 competitor. Lockheed-Martin? Embraer?

I say REKKOF !  
Quoting BEG2IAH (Reply 17):
What's everyone's take on this: "Boeing-related work supports approximately 22,000 direct and indirect jobs in Japan, a figure equal to nearly 43 percent of Japan’s total aerospace-related employment."

That should not influence private companies in making their decisions.

Quoting BlueSky1976 (Reply 12):
A350-900 is a perfect replacement for JAL's fleet of 777-200ERs.

That is correct, and I wonder why Airbus has not a larger share in Japan

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: carpethead
Posted 2013-02-25 05:10:22 and read 18221 times.

Quoting PHX787 (Reply 1):
Remember for a while NH experimented with the A320

That experiment has lasted over 20 years. They still have close to 20 remaining.
Many were on their way out as the new 738s are delivered but seeing that nothing from Everett outside of three 777s are going to be delivered, they may keep them longer as there is a shortage of lift.

The 787 grounding also throws a wrench in to the 763 & 744D retirement too. They have even sent eight 763s & 744Ds to the scrapper over than last six months.

Quoting ktachiya (Reply 26):
The new B773ER's being reconfigured only have about 230 seats or so, down from the current 272. It seems that they are searching for more acft the size of the A332 at the biggest, if not even smaller.

Not really, the A332 configured to JAL's heavy premium configuration would seat only 180 similar to its 787s.
Although, the notion of replacing the relatively new long-haul 777s fleet is pretty thin, JAL does have a need for a A359-sized replacement for its domestic 772s & 773s later this decade. If Airbus can get the A350 or perhaps a domesticated A330-lite into JAL's fleet, it would very easy to replace the by-then aging long-haul fleet of 777s next decade.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: sankaps
Posted 2013-02-25 05:31:49 and read 17852 times.

Quoting LY777 (Reply 25):
Are you joking?
IB, TP, LX, U2, EI, to name a few, have an all-Airbus fleet...
LH is also leaning towards an all-Airbus fleet (except their 748s) as they are about to phase out their 737s.
Same for AZ (except their 772s)

LCCs will always have one aircraft type -- but I do not think they have a *policy* of buying Airbus because they are European. Indeed EasyJet has indicated they may switch back to 737s. And Ryanair is all Boeing, but again not due to a policy but due to picking one that met their commercial needs the best.

For non-LCCs (which is what my comment referred to, though I should have been clearer), the only MAJOR airline in your list to have all Airbus is Iberia. Again not a result of any policy, but of commercial decisions made after evaluating both suppliers and their offers. If LH and AZ appear to be leaning Airbus (despite the presence of numerous Boeing aircraft in their fleets), it is again based on evaluation of both options and picking the ones that work best for them.

Bottom-line: No European airline has ever said or signaled via their actions that they would only buy Airbus by policy, and none of them have signed exclusive supplier deals like CO and AA did with Boeing in the past.

[Edited 2013-02-25 05:45:50]

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: abba
Posted 2013-02-25 05:32:56 and read 17813 times.

Quoting francoflier (Reply 9):
It seems Japan's flag carriers unquestioned loyalty to Boeing has taken a hit.



I think that we have to see this in the bigger picture. Up through the 80'ties and '90'ties Japan was considered politically as the main culprit when unemployment in the US got a hit. This was due to Japan's huge trade surplus. Often it was seen that one of the Japanese airlines placed a major order for Boeing aircraft when such discussion got a little too heated. We have to remember that the interaction between government and private enterprise in Japan is much closer than what we usually see in the West.

However, now is the situation such that China has taken over the role of being the culprit - and as a consequence the Japanese airlines feel more free not to take political considerations into account when they order new planes for their fleets. Personally, I have been waiting for this to happen sooner or later as it is a anomaly that two airlines as big as NH and JL both are both almost exclusive Boeing customers.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: airbazar
Posted 2013-02-25 05:41:30 and read 17662 times.

Quoting phxa340 (Thread starter):
This would represent a historic shift with Japanese airlines as for the most part they have relied on Boeing as their sole supplier. I wonder if this is hot air from the 787 mess or if he genuinely wants to introduce A into the fleet.

This may seem obvious but Airbus is not the only non-Boeing supplier in the world. Could they be looking at regional jets to lower the costs of their regional flying?

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: breiz
Posted 2013-02-25 05:57:42 and read 17405 times.

Quoting KL911 (Reply 28):
That is correct, and I wonder why Airbus has not a larger share in Japan

As explained in several threads, that's political.
The earlier breakthroughs for Airbus were the orders from JAS (A300s) and ANA (A320s & A321s).
Together with the A300s, JAS got the Airbus' livery as their new one.
Since then, the start-up StarFlyer is entirely equipped with A320s.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: Revelation
Posted 2013-02-25 06:22:29 and read 16975 times.

Quoting jetblueguy22 (Reply 3):

I think the most likely has to be Embraer. They seem to be the strongest regional aircraft producer at the moment. To jump from the E195 to a Boeing/Airbus type narrowbody probably wouldn't be that big of a leap. The question then becomes though, how good will the aircraft be, how will airlines with established fleets react to a completely different type than they already operate, and how will Boeing and Airbus react to someone stepping into their territory.

Implicit in this is: can EMB make a decent ROI if they do move into this space?

Quoting francoflier (Reply 9):
It seems Japan's flag carriers unquestioned loyalty to Boeing has taken a hit.

Then again, being such invested and dedicated customers of the 787 and having to suffer the full blow of Boeing's bad luck/screwups will put any loyalty to the test.

Indeed.

Quoting francoflier (Reply 9):
They also knew they were the first customers and that there is always a risk in being that. They got the appropriate discount.

I don't think so. We're talking four years late!

Quoting spacecadet (Reply 10):
Unless he thinks Boeing's about to go under, I don't see what "risk" there is in relying on one vendor.

Plenty of risks:
> The risk they'll tell you that they can change core technology, manufacturing and supply chain at the same time and not be late
> The risk they'll put together an airplane with the wrong fasteners so they can appear to make a rollout date
> The risk they'll hire people that don't know how to install fasteners and then say the issue was the blueprints
> The risk they'll have a major outsourced join fail during testing and say it was due to a poor interface spec
> The risk they'll use a subcontractor to design a panel and it will prove to not have decent FOD resistance
> The risk they'll use a leading-edge battery design and it'll have unexplained fires after EIS

An A350 purchase would put Boeing on notice that there are consequences to their dismal performance.

I doubt it will happen, though, because of the close relationship in the aerospace business between Boeing and Japan. Keep in mind that extends to the Japanese buying F-15s and AWACS from Boeing, and Japan's current nervousness about China.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: sankaps
Posted 2013-02-25 06:33:06 and read 16757 times.

Quoting airbazar (Reply 32):
This may seem obvious but Airbus is not the only non-Boeing supplier in the world. Could they be looking at regional jets to lower the costs of their regional flying?

They could be, but the context / tone of the statement makes it seem more likely he is referring to alternatives / competitors to Boeing, and not to complementary suppliers.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: glideslope
Posted 2013-02-25 06:41:18 and read 16673 times.

Boeing never should have let Allan leave. McNerney Jr. does not listen to the engineers IMO.

Too much "Just Do It".   

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: 777way
Posted 2013-02-25 06:43:32 and read 16627 times.

Quoting breiz (Reply 33):

The defunct cargo airline Galaxy operated A300F, ANA subsidiary Peach went for A320, and theres Skymark with the A380 order.

Also Air Asia Japan and Jetstar Japan both A320 operators.

[Edited 2013-02-25 06:48:14]

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: sankaps
Posted 2013-02-25 06:58:50 and read 16344 times.

Quoting 777way (Reply 37):
Also Air Asia Japan and Jetstar Japan both A320 operators.

I think the thread refers mainly to the two major Japanese airlines or "flag carriers",, JAL and ANA, and whether they feel (or have felt) pressure to buy only Boeing.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: Aesma
Posted 2013-02-25 07:02:59 and read 16267 times.

I'll believe it when I'll see it, and I think it's the same for Airbus and Boeing. Airbus will never offer bargain prices because they know it'll only be used to get Boeing to lower their offer, so JAL has to buy Airbus at "normal" discounted rates and only then they'll be taken seriously. They could do this with a small sub-fleet though, so that wouldn't cost too much.

Quoting spacecadet (Reply 10):
Unless he thinks Boeing's about to go under, I don't see what "risk" there is in relying on one vendor.

Well, he's talking about the 787 fiasco obviously. Fortunately for Boeing and JAL, it's only 50 planes. If the same had happened in 2-3 years it would have been epic, with many more 767 having been disposed of leading to major capacity troubles.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: breiz
Posted 2013-02-25 07:09:00 and read 16154 times.

Quoting 777way (Reply 37):
The defunct cargo airline Galaxy operated A300F, ANA subsidiary Peach went for A320, and theres Skymark with the A380 order.

Also Air Asia Japan and Jetstar Japan both A320 operators.

Correct. I forgot the first ones, specially Peach which shows that ANA has no technical reason not to order and continue to use the A320.
AirAsia and Jetstar are sub-fleets not linked to Japanese politics.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: AeroWesty
Posted 2013-02-25 07:10:08 and read 16117 times.

Quoting Aesma (Reply 39):
Well, he's talking about the 787 fiasco obviously.

Except in his quote, he's talking about pricing in that paragraph. I don't believe he's referring to Boeing collapsing over the 787 affair.

Quote:

"In a normal market there is tremendous risk from relying on one vendor. In order to provide good products at good prices, at lower prices a dual vendor system is a must."

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: 777way
Posted 2013-02-25 07:10:21 and read 16129 times.

Quoting sankaps (Reply 38):

Might be but some posters seem not to know that many other Japanese companies use Airbus aircraft, so just to enlighten those.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: jfk777
Posted 2013-02-25 07:12:06 and read 16184 times.

JAL with A380's doesn't seem to be. Boeing has the right airplanes for them, A330 can't fly far enough and A380's are too big. The 777 is the "right size" for JAL.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: airbazar
Posted 2013-02-25 07:17:17 and read 16054 times.

Quoting sankaps (Reply 35):
They could be, but the context / tone of the statement makes it seem more likely he is referring to alternatives / competitors to Boeing, and not to complementary suppliers.

The way I see it the context is risk mitigation by not relying on a single vendor. Airbus may be the only alternative for long haul, wide body aircraft but for short haul regional flying I'm sure they'd look at other alternatives besides Airbus and Boeing. Just like the 747 was too big for the new JAL, I wonder if the 738 won't be too big too in an era when LCC's are taking away a good chunk of the Y passengers, including JAL's own investment, Jetstar Japan. ANA has already jumped on the RJ bandwagon by ordering 15+10 MRJ 90's. I wouldn't be surprised to see JL do a similar thing.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: cjg225
Posted 2013-02-25 07:41:55 and read 15643 times.

As a supply chain grad student, I do want to point out that it's not an absolute that multisourcing is better. It all depends. Single-source supply has its place. Case in point: WN single-sourcing 737s. Now, I'll admit, their model is significantly different than JAL's, so, like I said, single-sourcing may work for them in their situation while it may not in JAL's case. I don't know; I haven't studied airlines from the perspective of their sourcing strategies, so I'm taking a guess here. But I did take issue with the idea that it's Procurement 101 to multi-source, which implies it's a bad idea categorically. Is my inclination to multisource when asked? Yes. But there can be many reasons why single-sourcing is a good idea, and if JAL has made it work, more power to them. Will this situation cause them to seriously rethink that? Possibly. Could also possibly be bluster. The Japanese are very, very relationship centric in business. Based on what I've read about the 787 grounding, I don't think there's enough evidence to make it highly likely that JL will suddenly start buying a bunch of Airbus products. From a supply chain perspective, again, that would actually be somewhat dangerous for a company that just went through Corporate Rehabilitation. They'd have to rework a number of functions to deal with a different product, setting up spare parts, training, ancillary equipment, etc. functions that, previously, they didn't have to deal with. This would be a rather long-term decision, I think. It's a big expense and something with which. A company as big as JL making a dramatic shift in procurement strategy would raise an eyebrow, for starters.

Just wanted to defend my academic arena.  

Carry on.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: KL911
Posted 2013-02-25 07:47:27 and read 15544 times.

Quoting breiz (Reply 33):
As explained in several threads, that's political.
The earlier breakthroughs for Airbus were the orders from JAS (A300s) and ANA (A320s & A321s).
Together with the A300s, JAS got the Airbus' livery as their new one.
Since then, the start-up StarFlyer is entirely equipped with A320s.

And the 4x A380's for Skymark. 

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: Paolo92
Posted 2013-02-25 07:56:55 and read 15331 times.

Quoting DocLightning (Reply 2):
But I think that the number of new airliners being ordered is such that there is room for a third supplier. I wonder if anyone will step up to the plate and start offering at least a 737/A320 competitor, if not a 787/A350 competitor. Lockheed-Martin? Embraer?
Quoting sankaps (Reply 38):
I think the thread refers mainly to the two major Japanese airlines or "flag carriers",, JAL and ANA, and whether they feel (or have felt) pressure to buy only Boeing.

There's Bombardier which looks interested in doing business there:
Bombardier Targets ANA to Japan Airlines for New CSeries
Quote:
Bombardier Inc., an aircraft maker with more planes in Japan than Airbus SAS, wants to add a salesperson dedicated to the country to win orders from All Nippon Airways Co. and Japan Airlines Co. for its CSeries jet.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: gulfstream650
Posted 2013-02-25 08:06:27 and read 15107 times.

Quoting Lufthansa (Reply 4):
Quoting Lufthansa (Reply 4):
he has raised a good point though.
In the past Japan was very much into relationships in who they did business with. But, that doesn't give anybody
any incentive to sharpen their pencils when its time to buy. And it would be a very very rare occurrence for a single
supplier to continuously for decades provide the best deal when asked every time. I think he is right to question it. He owes it to his companies stakeholders to extract the best possible deal for them. The chinese certainly know no such loyalty. I bet they got better deals too!

        

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: 777way
Posted 2013-02-25 08:07:58 and read 15113 times.

Quoting KL911 (Reply 46):

mentioned here

Quoting 777way (Reply 37):
Quoting breiz (Reply 33):
The defunct cargo airline Galaxy operated A300F, ANA subsidiary Peach went for A320, and theres Skymark with the A380 order.

Also Air Asia Japan and Jetstar Japan both A320 operators.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: sankaps
Posted 2013-02-25 08:17:27 and read 14966 times.

Quoting cjg225 (Reply 45):
Case in point: WN single-sourcing 737s. Now, I'll admit, their model is significantly different than JAL's, so, like I said, single-sourcing may work for them in their situation while it may not in JAL's case. I don't know; I haven't studied airlines from the perspective of their sourcing strategies, so I'm taking a guess here. But I did take issue with the idea that it's Procurement 101 to multi-source, which implies it's a bad idea categorically.



Hmmm.... you raise a good point with WN. I do agree they have a special relationship with Boeing.

I'd be curious though as to whether Airbus gets a chance to bid for WN's business or not?

If only Boeing gets to bid for their business, then it would be quite a unique example. However if Airbus does get to bid but thus far WN has selected Boeing, then it is entirely consistent with Procurement 101, in that you are entertaining bids from more than one supplier and thereby keeping the other one honest.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: AeroWesty
Posted 2013-02-25 08:21:57 and read 14891 times.

Quoting sankaps (Reply 50):
I'd be curious though as to whether Airbus gets a chance to bid for WN's business or not?

I would think whether or not Airbus gets the opportunity to bid for the business, WN would be in a position to know what the prices are for the best buyers from Boeing. If not, how could Boeing satisfy the agreements it had in place with airlines such as AA and CO where they were guaranteed the best prices in return for exclusivity? That's always been a bit of a curiosity to me.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: sankaps
Posted 2013-02-25 08:35:22 and read 14537 times.

Quoting AeroWesty (Reply 51):
If not, how could Boeing satisfy the agreements it had in place with airlines such as AA and CO where they were guaranteed the best prices in return for exclusivity? That's always been a bit of a curiosity to me.

You are referring to the "Most Favored Nation" clause in the contracts, which basically guarantees that the price you are paying is no more, or in some cases "better" than the lowest price paid by any other buyer "for a similar deal".

The issue is with determining what is similar for the MFN. Many factors go into it -- exact specs, volumes, payment terms, credit history, etc. Therefore a hard clause to enforce in practice. Which again is why getting a competing bid is usually just good business. Even if they are positive they are getting the best financial deal, there are other operational and strategic risks of signing exclusive agreements. Which is why procurement professionals tend to avoid exclusive agreements.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: AeroWesty
Posted 2013-02-25 09:02:52 and read 14049 times.

Quoting sankaps (Reply 52):
The issue is with determining what is similar for the MFN.

Yes, that's where my curiosity lies. In my mind, those figures would have to be somewhat general knowledge in order for all of the parties we're referring to being satisfied they're getting "the best price" from Boeing. If Boeing is sharing that info with AA or CO in return for supplier exclusivity, it shouldn't be all that difficult for an airline such as WN to come across it as well, making the process of getting a competing bid moot.

If there's an error in my thought process on this, I would think it would be in the arena of assuming that that data is not as widely known or dependable within such circles as I'm assuming.

When I've worked on procurement contracts, there's usually a floor which the listed price may not drop below, but may be made more lucrative on the back end via the cost of other services being discounted, or warranties extended beyond normal terms, etc.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: flyglobal
Posted 2013-02-25 09:35:24 and read 13515 times.

Quoting Aesma (Reply 39):
I'll believe it when I'll see it, and I think it's the same for Airbus and Boeing. Airbus will never offer bargain prices because they know it'll only be used to get Boeing to lower their offer, so JAL has to buy Airbus at "normal" discounted rates and only then they'll be taken seriously. They could do this with a small sub-fleet though, so that wouldn't cost too much.



The way I would try as an Airbus sales Team:
Friendly speaking in a sense:
You get the 'typical discount' for the first 19 Planes. The 20st, 30st, 40st, 50st will have 50% of the price of the first 19.

This strategy was used by a friend of mine selling SAP IT Classes. In this case preventing to much price pressure and to avoid just beeing in the game for negotiotion purpose he offered: ok after 19 Classes at regular rates, Class 20 and 21 is free of charge.

The same Airbus could use to prove e.g. Ryanair's willing for a real change.

regards

Flyglobal

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: sankaps
Posted 2013-02-25 09:45:22 and read 13337 times.

Quoting AeroWesty (Reply 53):
If Boeing is sharing that info with AA or CO in return for supplier exclusivity, it shouldn't be all that difficult for an airline such as WN to come across it as well, making the process of getting a competing bid moot.

The thing is every contract will have a strict confidentiality clause, so Boeing cannot just share the pricing they gave to X with Y. Boeing will have to disguise who the other buyers are, and Y will have to take Boeing's word for it, essentially, plus use general market intelligence.

This is why in practice I have found MFN clauses more of a "threat" than actually enforceable -- they are to a large extent toothless.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: Stitch
Posted 2013-02-25 09:57:28 and read 13164 times.

Quoting sankaps (Reply 55):
The thing is every contract will have a strict confidentiality clause, so Boeing cannot just share the pricing they gave to X with Y. Boeing will have to disguise who the other buyers are, and Y will have to take Boeing's word for it, essentially, plus use general market intelligence.

It really isn't that hard to find out what an airline paid for an airplane contract since they have to post that information as part of their required financial reporting as a publicly-traded company.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: sankaps
Posted 2013-02-25 10:14:27 and read 12867 times.

Quoting Stitch (Reply 56):
It really isn't that hard to find out what an airline paid for an airplane contract since they have to post that information as part of their required financial reporting as a publicly-traded company.

I don't believe that is the case at all, do you have any factual basis to back up this assertion? Which is why when information "leaks" out (for example recently it was leaked out what AI paid for their 787s), it makes news!

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: Navion
Posted 2013-02-25 10:43:10 and read 12452 times.

It is somewhat ironic that one of the possible causes of the 787 grounding is a Japanese designed and manufactured battery. The country of Japan is far and away the largest non-US supplier to the 787 program. Also Japan has profited mightily from their relationship with Boeing and JAL/ANA are secondary beneficiaries to much of this economic relationship.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: Stitch
Posted 2013-02-25 12:39:15 and read 10889 times.

Quoting sankaps (Reply 57):
I don't believe that is the case at all, do you have any factual basis to back up this assertion?

Certainly. Some examples:

Delta's SEC filing in August 2011 detailed their annual aircraft purchase commitments for the next five years. That filing noted DL would spend $4.2 billion to take delivery of 100 737-900ERs - divide $4.2 billion by 100 and you get $42 million per delivery.

Southwest's 2012 SEC filings show they planned to spend $13.2 billion over 11 years to take delivery of 350 737NGs and MAXs. Divide $13.2 billion by 350 and you get ~$38 million per delivery. You can break that down even farther since WN's statement publishes their delivery schedule per year and how much they will spend. So for 2012, for example, they planned to spend $902 million for 26 737-800s - $34.7 million a frame. This year, they planned to spend $1.224 billion for 41 737-800s - $29.9 million a frame.

Air India's Bridge Loan and Sale-and-Lease-Back RFPs for their 787-8s have shown the net cost per airframe.

Nimrod Capital LLC's filings provide information on what EK pays for their A380-800s and 777-300ERs that they sell and lease-back.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: DocLightning
Posted 2013-02-25 13:04:45 and read 10456 times.

Quoting francoflier (Reply 9):
If Airbus and Boeing, who have been designing and manufacturing airliners non stop for the last few decades, struggle to get any new design out without any major hiccup and risking bankruptcy, I can't imagine any of these would fare any better with less experience in the field.

Except they have to start somewhere. And Airbus also started basically from nothing and their very first project was very cutting edge. World's first widebody twin, glass cockpit, extensive composite use, supercritical airfoil, not to mention some pretty novel manufacturing techniques.

So it certainly can be done. It involves some risk, but it can be done.

Quoting Navion (Reply 58):
It is somewhat ironic that one of the possible causes of the 787 grounding is a Japanese designed and manufactured battery. The country of Japan is far and away the largest non-US supplier to the 787 program.

That said, NK and JL are not suppliers, they are customers. And they must choose their suppliers based on their own interests, not patriotism.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: Azure
Posted 2013-02-25 13:40:10 and read 9891 times.

Quoting DocLightning (Reply 60):
Airbus also started basically from nothing and their very first project was very cutting edge. World's first wide-body twin, glass cockpit, extensive composite use, supercritical airfoil, not to mention some pretty novel manufacturing techniques.

So it certainly can be done. It involves some risk, but it can be done.

I agree with you, except that Airbus was born with the support of several governments which in fact bore all financial risks. If I am not mistaken, this is the case of neither Embraer nor Bombardier : both are private companies and such an adventure (ie building a new wide-body from scratch) is too risky from a financial perspective in the current situation (the A and B duopoly). Should one member of this duopoly go bankrupt (which is not going to happen in the near future), the risk would be much lower and without any doubt a new competitor would come on this market...

JAL's chairman is either announcing in a very diplomatic way that JAL will buy Airbus soon, or he is just trying to put some stress on Boeing in order to receive highest compensations for the 787 fiasco. Or both...

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: anfromme
Posted 2013-02-25 13:56:14 and read 9626 times.

Quoting spacecadet (Reply 10):
nless he thinks Boeing's about to go under, I don't see what "risk" there is in relying on one vendor. The only risk is in that vendor thinking you're a bunch of chumps and overcharging you.

Well, there you have one significant risk when going with one vendor. There's the threat of vendor lock-in.
Generally, it's very unusual for a company like JAL or ANA - airlines with significant fleets - to consistently buy from a single vendor over multiple decades. Ignoring LCCs like Southwest or Ryanair for a minute because of their different fleet profile.

Quoting airbazar (Reply 44):
The way I see it the context is risk mitigation by not relying on a single vendor. Airbus may be the only alternative for long haul, wide body aircraft but for short haul regional flying I'm sure they'd look at other alternatives besides Airbus and Boeing.

Yup.

Quoting sankaps (Reply 50):
I'd be curious though as to whether Airbus gets a chance to bid for WN's business or not?

Well, when NEO was first announced, Southwest seemed to actually start talking to them about that possibility:
http://www.reuters.com/article/2011/...hwest-airbus-idUSLNE77401020110805
WIth some qualifiers, though:

Quote:
A second source stressed that while highlighting the success of Airbus's new A320neo, the letters [from Southwest] did not call for negotiations or do much more for now than break the ice.
[...] n an interview with Fox Business Network, Kelly said Southwest was not in talks aimed at placing an order with the A320neo. "We're talking exclusively with Boeing and that's only fair because that's what we want to make work," he said.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: manny
Posted 2013-02-25 13:56:52 and read 9639 times.

What most people forget are even thought the 787 has had some problems its still way ahead of the competition and it will take some time for the competition to get even close.

Every new type of a/c has some teething issues. The 787 has had a few more than anticipated but in time they will be resolved.

Any reaction by airlines on this is nothing but premature.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: scbriml
Posted 2013-02-25 14:00:41 and read 9610 times.

Quoting spacecadet (Reply 10):
On the other hand, the quote sounds a lot like a negotiation to me.

Or denial?

Quoting spacecadet (Reply 10):
I don't see what "risk" there is in relying on one vendor. The only risk is in that vendor thinking you're a bunch of chumps and overcharging you.

Aside from contradicting yourself, ask JAL and ANA how much the 787 fiasco has cost them thus far. We're rapidly approaching the 5th anniversary of the 787's original EIS date:
> The cost of fleet and route planning shot to pieces.
> The cost of all the extra fuel they've burned in that nearly five years (still growing with the few 787s they have got now sat on the ground).
> The cost of the additional 767s they purchased to cover the delayed 787 deliveries.

[Edited 2013-02-25 14:49:32]

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: packsonflight
Posted 2013-02-25 14:18:32 and read 9326 times.

Quoting Revelation (Reply 34):
I doubt it will happen, though, because of the close relationship in the aerospace business between Boeing and Japan. Keep in mind that extends to the Japanese buying F-15s and AWACS from Boeing, and Japan's current nervousness about China.

This makes sense, but I wonder who decides to shop only Boeing. I mean is the government ordering the airlines not to look at Airbus

The Japanese airlines must pay close to list price with Boeing if they can not shop around.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: Revelation
Posted 2013-02-25 16:22:07 and read 7892 times.

Quoting DocLightning (Reply 60):
Quoting francoflier (Reply 9):
If Airbus and Boeing, who have been designing and manufacturing airliners non stop for the last few decades, struggle to get any new design out without any major hiccup and risking bankruptcy, I can't imagine any of these would fare any better with less experience in the field.

Except they have to start somewhere. And Airbus also started basically from nothing and their very first project was very cutting edge. World's first widebody twin, glass cockpit, extensive composite use, supercritical airfoil, not to mention some pretty novel manufacturing techniques.

Nothing, except perhaps the involvement of the firms that created the Concorde (Sud, BAe) + MBB, as well as lots of government largesse both during the Concorde era and whilst setting up Airbus. Point being BBD and EMB have the benefit of their executive and regional jets and favorable relationships with their governments, but from what I can tell, not quite the silver spoon in the mouth that Airbus had, so I think it's a bigger challenge from them.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: spacecadet
Posted 2013-02-25 16:49:14 and read 7532 times.

Quoting BlueShamu330s (Reply 24):
It's just not the Japanese way of doing things; they simply wouldn't be what they would consider to be so disrepectful, IMO.

Except that you 100% agreed with what I was saying at the beginning of your post, then did a 180 and disagreed with my direct quote here.

Anyway, this is *exactly* the Japanese way of doing things. A lot of people in the west misunderstand Japanese business and tend to lump them all together, but I actually run a business nearly 100% reliant on Japanese suppliers so I do business with them on a daily basis. They can be ruthless. The politeness is irrelevant; it's partly based on tradition, but it's also part strategy. I can honestly say that I have never been "disrespected" by westerner suppliers in the way I have been by certain Japanese companies my business used to deal with - "used to" being the key phrase. Like anywhere else, some companies are better or worse than others depending on their corporate culture and leadership, but it is just not accurate to say a Japanese company simply "wouldn't be disrespectful". Some of them will say one thing to your face and then say the exact opposite in public, or to others in your industry. The only thing they have in common is that they're all polite *in person*.

Regardless, I don't see what he said as disrespectful. What he said was completely reasonable by any objective measure, as most people here seem to be pointing out. What it is, though, is a way to get Boeing to wonder if JAL's business is going elsewhere... which is the start of getting a nice discount on their next deal.

Quoting scbriml (Reply 64):
Aside from contradicting yourself

I never contradicted myself, so no point replying to the rest of your post.

Quoting Revelation (Reply 34):
Plenty of risks:

None of those are risks inherent to buying from one vendor - they're risks inherent to buying any airplane, from anybody.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: PPVRA
Posted 2013-02-25 17:14:51 and read 7260 times.

Quoting francoflier (Reply 9):
If Airbus and Boeing, who have been designing and manufacturing airliners non stop for the last few decades, struggle to get any new design out without any major hiccup and risking bankruptcy, I can't imagine any of these would fare any better with less experience in the field. The 787 is really pointy-tip-of-the-spearhead stuff. Even Airbus remained more conservative with the A350 design.

I doubt Embraer would skip the 737/320 market and go straight for a long haul aircraft. And as of late, neither A nor B have been very bold with their 150-200 seat offerings. That's inviting competition.

And remember, pointy-tip-of-the-spearhead stuff from many suppliers, from across the globe, that would be more than happy ($ale$) to see their equipment installed on another aircraft model.

Quoting Azure (Reply 61):
I agree with you, except that Airbus was born with the support of several governments which in fact bore all financial risks. If I am not mistaken, this is the case of neither Embraer nor Bombardier : both are private companies and such an adventure (ie building a new wide-body from scratch) is too risky from a financial perspective in the current situation (the A and B duopoly). Should one member of this duopoly go bankrupt (which is not going to happen in the near future), the risk would be much lower and without any doubt a new competitor would come on this market...

BBD and Embraer can do it the same way Boeing, MD, Lockheed, etc did. Slowly grow their offerings and that will slowly grow their companies, allowing them to take bigger risks without betting the farm. Actually, jumping into the 737/320 market could yield very fast growth to either of these companies. Maybe 10-20 years after EIS of such an aircraft they could jump into long-haul.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: trex8
Posted 2013-02-25 21:45:28 and read 5518 times.

Quoting jfk777 (Reply 43):
A330 can't fly far enough

??? Awful lot of Far east carriers who fly lots of A330s!! And JAL did inherit a big A300 fleet from JAS.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: abba
Posted 2013-02-25 23:05:09 and read 5364 times.

Quoting Stitch (Reply 59):
Delta's SEC filing in August 2011 detailed their annual aircraft purchase commitments for the next five years. That filing noted DL would spend $4.2 billion to take delivery of 100 737-900ERs - divide $4.2 billion by 100 and you get $42 million per delivery.



The problem seems to be, that airplanes are rarely sold "clean". A lot of other things often enter the deal - such as training and a number of different services. Especially now when planes are being constantly monitored - often by the OEM. And then there is the question of getting rid of old equipment. Is the OEM going to give you a hand there? At what price is the OEM going to install your very special in-flight entertainment system - perhaps for free? Now heavy rebates might well be covered in accounts in terms of higher than expected resale and in terms of lower than expected expenses in other areas.

Often a car dealer - in my country - will rather pay you a very good price for your old car and give you some extras for free than giving you too much rebate on your new car. It is known that things like this has also entered into deals when it comes to airplanes. So how many sweeteners do you get as a part of the deal?

I think that one thing is what your accounts claim that you have paid in principle. What you actually paid in reality is an entirely different matter.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: sankaps
Posted 2013-02-26 00:08:51 and read 5173 times.

Quoting abba (Reply 70):
I think that one thing is what your accounts claim that you have paid in principle. What you actually paid in reality is an entirely different matter.

Thanks abba, you beat me to it. An aircraft purchase deal involves many more factors than just the imputed price. Spares, crew training, loaners, PDP payments, delivery timing commitments, warranties, post delivery payment schedule and terms, financing assistance, performance guarantees, buy-backs or trade-ins of existing aircraft. All of which can differ from deal to deal. Every aircraft purchase contract I have seen hasa confidentiality clause clearly spelt out in it. Which is what makes enforcement of the "Most Favored Nation" clause difficult.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: scbriml
Posted 2013-02-26 00:11:54 and read 5179 times.

Quoting spacecadet (Reply 67):
I never contradicted myself



Huh? You said you didn't see what the risk in relying on one vendor was. Then proceeded to identify one of the many risks!   

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: sankaps
Posted 2013-02-26 00:21:27 and read 5140 times.

Quoting spacecadet (Reply 67):
None of those are risks inherent to buying from one vendor - they're risks inherent to buying any airplane, from anybody.

True, and the basic principle of risk management is to spread your risks -- do not put your eggs in one basket. The chances of two suppliers failing at the same time is lower than of one supplier failing. Imagine for a moment (not that it is close to likely to happen) that Boeing goes bust. Airlines that have sole-sourced from Boeing will be far more screwed than those that bought aircraft from both Boeing and Airbus.

Besides the risk, there is the simple commercial negotiation and long term product evolution angle -- price and features competition from competing bids is what keeps pricing down and features up. Sole sourcing dulls this significantly.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: BEG2IAH
Posted 2013-02-26 00:54:31 and read 5070 times.

Quoting KL911 (Reply 28):
That should not influence private companies in making their decisions.

Neither JAL nor ANA are private companies.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: abba
Posted 2013-02-26 01:27:14 and read 4962 times.

Quoting packsonflight (Reply 65):
I mean is the government ordering the airlines not to look at Airbus


Could very well be the case, even if I believe - as far as I know Japanese culture - that would not be spelled out that directly.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: 777way
Posted 2013-02-26 02:13:23 and read 4852 times.

Quoting BEG2IAH (Reply 74):

they arent? I could have sworn they are.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: carpethead
Posted 2013-02-26 02:27:42 and read 4875 times.

Quoting BEG2IAH (Reply 74):
Neither JAL nor ANA are private companies.

Care to back up your bold statement.

Quoting trex8 (Reply 69):
Awful lot of Far east carriers who fly lots of A330s

Yes, mostly for regional flying but very little of it is across the Pacific or to Europe.
To add, NH & JL are the only two major Asian airlines to not operate A330s.
OZ, KE, CA, MU, CZ, HU, CZ, HX, PR, CI, BR, TG, MH, SQ, & GA all have them.
Unfortunately, the time window for either of them to order the A330 has passed but the A350 and A320NEO will definitely give NH & JL some options.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: sankaps
Posted 2013-02-26 04:31:05 and read 4659 times.

Quoting BEG2IAH (Reply 74):

JAL and ANA are most definitely private companies, as private as any in the US.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: B777LRF
Posted 2013-02-26 05:00:06 and read 4595 times.

Quoting Navion (Reply 58):
It is somewhat ironic that one of the possible causes of the 787 grounding is a Japanese designed and manufactured battery.

But it's a tragedy you've already found the root cause of these incidents, without bothering to tell the FAA, JAA and Boeing. Or it could just be the problems are not with the batteries, but with e.g. the charging/monitoring system or a faulty installation. But since we don't know either way, your blanket statement falls flat on its face.

And let's not forget that, at the end of the day, Boeing has signed off on the electrical system and agreed to install it on aircraft bearing their name. Who actually made the different bits and bobs is somewhat irrelevant; at the end of the day it'll be Boeing holding the ball. Perhaps best witnessed by the fact it was Boeing and the FAA what had a meeting, not the FAA, Boeing and a barrage of their sub-contractors and risk-sharing partners.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: AeroWesty
Posted 2013-02-26 05:16:44 and read 4537 times.

Quoting carpethead (Reply 77):
Quoting BEG2IAH (Reply 74):
Neither JAL nor ANA are private companies.

Care to back up your bold statement.

It sounds like the confusion stems from that the term "private" can have different definitions. One use can be government-owned (public) vs. not government-owned (private), another to describe the difference between companies whose stock is closely-held (private) vs. one whose stock is traded on an exchange (public).

JAL and ANA are private in terms of not being government-owned, but public in terms of having their stock traded on an exchange.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: Stitch
Posted 2013-02-26 07:10:30 and read 4378 times.

Quoting abba (Reply 70):
I think that one thing is what your accounts claim that you have paid in principle. What you actually paid in reality is an entirely different matter.

That is what they actually paid, because otherwise they're publishing false data in their filings and the SEC and shareholders tend to frown on that practice.  

That being said, both you and sankaps are correct in noting that how that price breaks down by line item is not always known.

FR's 2005 filing on their 70-frame 737-800 order gave a "basic price" of $51 million per airframe and engine with an additional $900,000 for customer-sourced equipment. But it also noted that Boeing was providing support services and would install winglets at no charge. They also reported "certain price concessions" in the form of credits and allowances that would "reduce the effective price of each aircraft to Ryanair significantly below the basic price". While those "price concessions" were not broken out, the end result was FR handed Boeing a check for around $29 million for each 737-800 delivered.

But yes, I will concede that the filings will not ensure a customer gets the best possible price for each line item. That's why you hire good negotiators. But it will at least give those negotiators a ballpark to start at.  Smile

[Edited 2013-02-26 07:16:21]

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: alfa164
Posted 2013-02-26 07:15:02 and read 4360 times.

Don't forget that Mitsubishi is getting into the RJ business. There might be a sound business case for using those regionally - and without disturbing the "special relationship" between Japan/USA and JL/Boeing.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: BEG2IAH
Posted 2013-02-26 13:36:06 and read 4023 times.

Quoting carpethead (Reply 77):
Care to back up your bold statement.

Not sure why you think my statement is "bold". Here is some detail of their latest trades on the Tokyo Stock Exchange:
JAL: http://quote.tse.or.jp/tse/quote.cgi...EDetail1&MKTN=T&QCODE=9201
ANA: http://quote.tse.or.jp/tse/quote.cgi...EDetail1&MKTN=T&QCODE=9202

Quoting sankaps (Reply 78):
JAL and ANA are most definitely private companies, as private as any in the US.

AeroWesty provided some further detail in response #80, but a company is not private if its shares are traded in a stock exchange. The fact that you can buy their shares of stock (i.e., publicly traded) does not make them a privately held company (either no shares exist or if they do they are held privatly by a handful of large investors). I can provide more detail if needed.

[Edited 2013-02-26 13:38:59]

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: AngMoh
Posted 2013-02-26 15:24:39 and read 3876 times.

Quoting spacecadet (Reply 67):
Anyway, this is *exactly* the Japanese way of doing things. A lot of people in the west misunderstand Japanese business and tend to lump them all together, but I actually run a business nearly 100% reliant on Japanese suppliers so I do business with them on a daily basis. They can be ruthless. The politeness is irrelevant; it's partly based on tradition, but it's also part strategy. I can honestly say that I have never been "disrespected" by westerner suppliers in the way I have been by certain Japanese companies my business used to deal with - "used to" being the key phrase. Like anywhere else, some companies are better or worse than others depending on their corporate culture and leadership, but it is just not accurate to say a Japanese company simply "wouldn't be disrespectful". Some of them will say one thing to your face and then say the exact opposite in public, or to others in your industry. The only thing they have in common is that they're all polite *in person*.

In Japan, the tone of the message can be polite, but the content ruthless. Only in Japan we were told that we were completely incompetent as a supplier, provided an unacceptable level of service and did not put in enough effort in and would never ever get business again, but in a soft and gentle tone and without any emotion which I never experienced before. We were expected to work day and night to fix the problem regardless of what it would do to us as persons. We rescued the program but lost the follow up business. I asked our Japanese rep if local suppliers get treated the same. The answer was: "No, they get treated much worse. They know you are a foreigner, they know you can't take it".

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: anfromme
Posted 2013-02-26 15:57:44 and read 3817 times.

Quoting BEG2IAH (Reply 74):
Neither JAL nor ANA are private companies.
Quoting BEG2IAH (Reply 83):
AeroWesty provided some further detail in response #80, but a company is not private if its shares are traded in a stock exchange. The fact that you can buy their shares of stock (i.e., publicly traded) does not make them a privately held company (either no shares exist or if they do they are held privatly by a handful of large investors). I can provide more detail if needed.

You're using only one of the two possible definitions (explained by AeroWesty) of the term "private company".

The original reply you responded to was this:

Quoting KL911 (Reply 28):

Quoting BEG2IAH (Reply 17):
"What's everyone's take on this: "Boeing-related work supports approximately 22,000 direct and indirect jobs in Japan, a figure equal to nearly 43 percent of Japan’s total aerospace-related employment.""

That should not influence private companies in making their decisions.

I think it was clear from context that KL911 meant "private" in the sense of "not government-owned" - not in the sense of "privately held, not publicly traded".

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: sankaps
Posted 2013-02-26 16:37:48 and read 3750 times.

Quoting AeroWesty (Reply 80):
Care to back up your bold statement.

It sounds like the confusion stems from that the term "private" can have different definitions. One use can be government-owned (public) vs. not government-owned (private), another to describe the difference between companies whose stock is closely-held (private) vs. one whose stock is traded on an exchange (public).

JAL and ANA are private in terms of not being government-owned, but public in terms of having their stock traded on an exchange.

Exactly. Not government owned. In the context of the discussion that was being had about pressure on ANA and JAL to buy Boeing due to Japanese trade connections, "not private" is naturally assumed to mean "govt owned" in this case.

Quoting BEG2IAH (Reply 83):
AeroWesty provided some further detail in response #80, but a company is not private if its shares are traded in a stock exchange. The fact that you can buy their shares of stock (i.e., publicly traded) does not make them a privately held company (either no shares exist or if they do they are held privatly by a handful of large investors). I can provide more detail if needed.

Publicly traded companies are still considered "private" companies in that they are not govt owned.

Quoting anfromme (Reply 85):
I think it was clear from context that KL911 meant "private" in the sense of "not government-owned" - not in the sense of "privately held, not publicly traded".

Exactly.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: BEG2IAH
Posted 2013-02-26 18:34:24 and read 3609 times.

Quoting anfromme (Reply 85):
You're using only one of the two possible definitions (explained by AeroWesty) of the term "private company".

There are no "two possible definitions" so I cannot pick whichever I prefer. There is only one definition of a private company - closely held.

Quoting anfromme (Reply 85):
I think it was clear from context that KL911 meant "private" in the sense of "not government-owned" - not in the sense of "privately held, not publicly traded".

Right, kinda, but let's see what exactly you guys are actually implying. If both JAL and ANA almost exclusively fly Boeing-made airplanes they must have been government-owned when all these new B767s, B777s, and B787s were ordered. Wrong. They were not. They were as you put it "private companies" when the orders were made, as much as they are "private" today, but as you imply they were somehow wrongly forced into buying Boeing aircraft. Now, what has changed in their ownership structure over the last year or so to lead you to conclude that the same Boeing-influence on their fleet decisions doesn't exist today? In other words, if they were "forced" to buy Boeing aircraft in the past, where did the "enforcer" go? If you look into their ownership structure (not guess, but look into), both ANA and JAL have 0.04-0.06% of all shares owned by the government for the last 4-5 years at least (source companies' annual reports). So, government obviously didn't influence their decisions through direct ownership. My question is - what could've possibly influenced "private companies"? You claim nothing really can influence their decision. Right? Yeah, right…

Quoting sankaps (Reply 86):
Exactly. Not government owned. In the context of the discussion that was being had about pressure on ANA and JAL to buy Boeing due to Japanese trade connections, "not private" is naturally assumed to mean "govt owned" in this case.

So you want to say that if you can buy 3 shares of say JAL's stock you can influence their decision to buy Airbus instead? OK, maybe in theory. Check their major shareholders (I did), it might give you some ideas. Let's also check some fairly recent facts. How do you explain that JAL, after being under bankruptcy protection from January 2010 through March 2011 (and no listed shares until recently), received a JPY 350 billion injection from the 50% government-owned Enterprise Turnaround Initiative Corp (source: WSJ)? This is not a loan, it's a capital injection. So if JAL was buying Boeing aircraft with government direct ownership of 0.05%, what will happen now when government owns indirectly "slightly" more? There is more to say about complex US-Japan relationship, but I will avoid it here. It is more than obvious that these fleet decisions are not made in a one-dimensional world you guys are trying to portray here.

Quoting sankaps (Reply 86):
Publicly traded companies are still considered "private" companies in that they are not govt owned.

And cold is often considered the flu, but it’s not. Things in business and law are defined precisely for a reason.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: AeroWesty
Posted 2013-02-26 19:27:10 and read 3539 times.

To avoid confusion, public and private are usually qualified by a suffix. Such as, JAL and ANA are private-sector firms which are publicly-held. So in the original reference, the two companies could simply have been referred to as being in the private sector, which would have removed any ambiguity.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: sankaps
Posted 2013-02-26 20:19:31 and read 3493 times.

Quoting BEG2IAH (Reply 87):
They were as you put it "private companies" when the orders were made, as much as they are "private" today, but as you imply they were somehow wrongly forced into buying Boeing aircraft. Now, what has changed in their ownership structure over the last year or so to lead you to conclude that the same Boeing-influence on their fleet decisions doesn't exist today? In other words, if they were "forced" to buy Boeing aircraft in the past, where did the "enforcer" go?

What has changed is that JAL has had a near-death experience, has a new CEO from outside the industry who was given a free hand to reform JAL, and who has gained tremendous reputation and clout as a result of what is perceived as a sharp turnaround and re-structuring, and who has clearly stated that he is not beholden to any sacred cows or norms followed by past management.

What has also changed for both ANA and JAL is that the 787 grounding has happened, giving them some leverage to be able to argue for a change from sole-sourcing of aircraft from a single supplier.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: BEG2IAH
Posted 2013-02-26 21:23:53 and read 3383 times.

Quoting sankaps (Reply 89):
What has changed is that JAL has had a near-death experience, has a new CEO from outside the industry who was given a free hand to reform JAL, and who has gained tremendous reputation and clout as a result of what is perceived as a sharp turnaround and re-structuring, and who has clearly stated that he is not beholden to any sacred cows or norms followed by past management.

What has also changed for both ANA and JAL is that the 787 grounding has happened, giving them some leverage to be able to argue for a change from sole-sourcing of aircraft from a single supplier.

Absolutely, all valid points, which should've been brought from the beginning, instead of baseless and unfounded ownership story. You also said previously:

Quoting sankaps (Reply 86):
Exactly. Not government owned. In the context of the discussion that was being had about pressure on ANA and JAL to buy Boeing due to Japanese trade connections, "not private" is naturally assumed to mean "govt owned" in this case.

I would just say good luck to the JAL CEO having 80% of total equity injected indirectly from government.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: anfromme
Posted 2013-02-27 02:50:52 and read 3115 times.

Quoting BEG2IAH (Reply 87):
There are no "two possible definitions" so I cannot pick whichever I prefer. There is only one definition of a private company - closely held.

You're tying down "private company" to exclusively mean "privately-held company", where it can also refer to "private sector company". Unless you add one of those additional qualifiers ("-held" or "sector") after the term "private", the term is ambiguous, at least unless you're talking about a strict legal definition of the term. Strict definitions particular to a certain domain (legal, scientific, etc.) don't necessarily tie up with common usage of terms - see e.g. the difference between a "theory" in colloquial language and a "theory" in the scientific sense.

Quoting AeroWesty (Reply 88):
To avoid confusion, public and private are usually qualified by a suffix. Such as, JAL and ANA are private-sector firms which are publicly-held. So in the original reference, the two companies could simply have been referred to as being in the private sector, which would have removed any ambiguity.

  
It may have been helpful to clarify that ambiguity to begin with, rather than claiming outright that KL911 was wrong and thus triggering a discussion about semantics.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: sankaps
Posted 2013-02-27 03:10:44 and read 3062 times.

Quoting BEG2IAH (Reply 90):
Absolutely, all valid points, which should've been brought from the beginning, instead of baseless and unfounded ownership story

I guess some of us assumed (wrongly) that those commenting on this thread would know the context of the discussion and the recent history of JAL and the new CEO before jumping in to add their comments.

Quoting BEG2IAH (Reply 90):
You also said previously:

Quoting sankaps (Reply 86):
Exactly. Not government owned. In the context of the discussion that was being had about pressure on ANA and JAL to buy Boeing due to Japanese trade connections, "not private" is naturally assumed to mean "govt owned" in this case.

I would just say good luck to the JAL CEO having 80% of total equity injected indirectly from government.

I don't know what else to add to everyone else's comments to "private" vs "privately held" vs "govt owned". Like in any airline re-structuring, the govt / public insititutions have been involve (like when the PBGC writes off pension obligations in US airline Chap 11s). Does not change the fact JAL is not, and will not become, govt owned.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: BEG2IAH
Posted 2013-02-27 15:20:49 and read 2653 times.

Quoting sankaps (Reply 92):
I guess some of us assumed (wrongly) that those commenting on this thread would know the context of the discussion and the recent history of JAL and the new CEO before jumping in to add their comments.

Yes, I insisted on correct terms because in business practice there is no ambiguity. The whole reason I pointed to a specific definition is one of the posters' underlying claim that companies which are not owned by government have all freedom to make fleet decisions. This is a very naive and simply wrong assumption that has no basis in corporate reality. I provided enough context (historical facts, not uninformed guesses) to show that this argument doesn't hold water in case of ANA and especially JAL.

Quoting sankaps (Reply 92):
Does not change the fact JAL is not, and will not become, govt owned.

It was government-owned in the past (fully privatised in 1987 and until then ANA and JAS couldn't even compete with JAL). And now 80% of its equity is held by government-owned entity. I'm glad facts matter in the business world unlike on A.net. If facts and precise definitions can be twisted and modified in the aviation field to push own agendas, why wouldn't they be customized in the business field. Makes perfect sense here on A.net.

Topic: RE: JAL Chairman : 100% Reliance On Boeing "Abnormal"
Username: jetblueguy22
Posted 2013-02-27 16:57:23 and read 2569 times.

The thread has gone off topic and will be archived to future posts. All posts after the lock will be removed for housekeeping purposes only.
Thanks
Pat


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