Airbus to place big order in Japan

Airbus plans to order more than 5 percent of the components for its new A350 aircraft from companies in Japan, seeking a foothold in a market dominated by Boeing.

Airbus is in talks with Teijin, Toray Industries and 20 more potential suppliers for the A350, Executive Vice President Kiran Rao said in Tokyo last Friday. The 300-seat plane, which competes with Boeing's 787 Dreamliner, may have more Japanese parts than any other Airbus aircraft, he said.

Manufacturing more of the A350 in Japan may help Airbus win orders in Asia's biggest aviation market after China. Supply agreements would also boost the Toulouse, France-based company's campaign to sell the A380 superjumbo to Japanese airlines, the biggest users of large commercial jets.

Boeing has 80 percent of the Japanese market and is using local companies to supply and finance more a third of the structure for the 787.

"Japan is an important market where Airbus is underrepresented relative to Boeing," said Sandy Morris, an analyst at ABN Amro in London. "It's also a key target for the A380, because the Japanese are big operators of the 747, and if anyone's going to upgrade to larger planes, it would be them."

Airbus, which is building a factory in China to make lightweight parts for the A350, wants to strengthen production tie-ups in Japan to win orders from Japan Airlines and All Nippon Airways, the country's largest carriers.

Demand for air travel is rising in Asia as economic growth in the region encourages people to fly on business and on vacation.

"Japan is a very important market in terms of technology, production, cooperation and sales," Rao said while attending a seminar for the 525-seat A380 in Tokyo. "We're keen to improve relations with Japan."

In the market for midsize, long-range planes, Japan Airlines and All Nippon Airways have so far chosen the 250-seat Dreamliner over the A350, with firm orders for 85 planes.

They have also ordered 75 single-aisle 737s from Boeing since April 2003, instead of Airbus' competing A320.

Rao said that at this stage Airbus isn't seeking to bring in Japanese subcontractors as risk-sharing partners, which would require them to invest funds and develop parts.

Before taking their stake in the 787, Japanese companies were 20 percent risk-sharing suppliers on Boeing's older 777 model.