Bloomberg News

Japan Air Orders 10 More Boeing 787s, Boosting Backlog to 45

February 15, 2012

(Updates with cost-cut target in fourth paragraph.)

Feb. 15 (Bloomberg) -- Japan Airlines Co. will order 10 more Boeing Co. 787s, boosting a backlog to 45, as it expands international operations following a state-backed turnaround.

The airline will also convert 10 existing 787 orders to the larger -9 version from the smaller -8, according to a statement today.

JAL will add more orders even after delivery delays forced it to postpone the start of 787 services by a month to the end of April, President Yoshiharu Ueki told reporters today in Tokyo. The carrier has waited waited more than three years longer than planned for its first Dreamliner after Boeing delayed deliveries because of struggles with new materials and production methods.

The new fuel-efficient planes will help JAL achieve a goal of finding 50 billion yen ($637 million) in cost savings in the five years starting April 1. The airline will spend 478 billion yen upgrading its fleet in the period.

Net income will also probably drop to 113 billion yen next fiscal year from a forecast 160 billion yen in the year ending March 31, the carrier said today. Profit was 146 billion yen in the nine months to Dec. 31 on sales of 909.1 billion yen, it said earlier this month.

Flight Plans

The airline is considering an initial public offering as early as September after a reorganization that included cutting a third of its workers, grounding planes and receiving funding from the country’s largest banks.

JAL added Helsinki and San Diego to its list of planned 787 destinations, which already includes Boston, Beijing, Singapore, Delhi and Moscow. The carrier intends to fly Tokyo-Helsinki four times a week starting in March 2013. JAL will also expand a code-sharing agreement with Finnair Oyj, according to the Finnish carrier.

Japan Air may also form a venture with Finnair after saying earlier this month it had applied for one with British Airways.

“We’re optimistic about considering a joint-venture” with Finnair, Ueki said.

Japan Air and British Airways applied to form a venture on Japan-Europe routes that would let them share revenue, coordinate schedules and potentially add new services, the Japanese airline said Feb. 8 in a statement.

JAL is seeking antitrust immunity for the plan from Japan’s Ministry of Land, Infrastructure, Transport and Tourism, it said.

All Nippon Airways Co., Japan’s largest listed carrier, is so far the only carrier operating the 787. It began flying the plane domestically in November and added flights to Frankfurt last month.

--Editors: Dave McCombs, Neil Denslow

To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net


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