Japan Airlines and Boeing reach deal for 21 737 MAX jets

4:29 am Thursday, March 23rd, 2023

(Reuters) -Japan Airlines has placed its first-ever order for the Boeing 737 MAX, announcing a plan on Thursday to buy 21 jets to replenish its narrowbody fleet.

The deal is worth at least $2.5 billion at list prices, Reuters previously reported, and notches a win for Boeing against European rival Airbus, which was in talks with JAL on the bestselling A320neo narrowbody jet.

JAL President Yuji Akasaka told reporters the company intended to bring the new planes into its fleet from 2026. The range and fuel efficiency of the 737 MAX will reduce carbon emissions by 15% compared to the planes they are replacing, he said.

“I believe this is a very high potential aircraft,” Akasaka said.

Reuters reported details of the deal on Wednesday, citing industry sources.

The JAL order ensures a foothold for the MAX with Japan’s flagship carrier as Boeing strives to undermine Airbus’s lead in the narrowbody market.

“One problem that has hobbled the (737 MAX) program is that despite good orders, there haven’t been as many high profile users. This certainly helps a lot,” said Richard Aboulafia, an aerospace analyst with AeroDynamic Advisories.

Although JAL predominantly operates Boeing planes, it delivered a shock to the aircraft industry in 2013 when it opted to buy Airbus’s A350 widebody aircraft over the Boeing 787 Dreamliner, which at the time was struggling to correct technical problems.

While JAL’s current fleet of 48 Dreamliners now dwarfs the 11 A350s owned by the carrier, the initial Airbus order raised questions about whether Boeing would continue to dominate the Japanese market.

Those concerns were heightened by the 737 MAX crisis, which led All Nippon Airways (ANA) to delay finalizing an order for 20 MAXs first announced in January 2019. ANA and Boeing concluded the MAX deal in July.

The Boeing 737-800 currently makes up the largest portion of JAL’s narrowbody fleet, with the carrier owning 47 jets and leasing another 17 737s, according to JAL.

However, Airbus has gained traction in Japan’s narrowbody market, with ANA’s low-cost Peach unit operating A320s and JAL’s Jetstar Japan flying leased A320s.

“It’s a battle, keeping Japan,” Aboulafia said. Boeing “seems to have scored a victory here.”

(Reporting by Valerie Insinna in Washington, Rocky Swift and Maki Shiraki in Tokyo. Editing by Chris Reese and Mark Potter)