Boeing's deal with Japan is victory in Airbus rivalry

A day after European aircraft maker Airbus SAS landed its first 10 orders for the A350, a wide-body plane that will compete directly with Boeing Co.'s new 7E7 Dreamliner passenger jet, its U.S. rival delivered a rapid counterpunch by selling 30 7E7s.

Analysts said the $4 billion deal reached Wednesday between Boeing and Japan Airlines Corp., Asia's largest carrier in revenue terms, represents an important, though modest victory for Boeing in its mounting trans-Atlantic rivalry.

But refusing to cede even the slightest public relations edge, Airbus announced later on Wednesday that a new Kuwaiti airline, Jazeera Airways, had ordered four Airbus A320s, narrow-body aircraft that compete with Boeing's 737.

Still, Boeing rightfully laid claim to the deal du jour and investors seemed to agree. Shares of the Chicago-based company rose 49 cents Wednesday to $53.91 on the New York Stock Exchange, close to their 52-week high of $55.48.

"It matters a lot, if only to reverse the perception that Airbus regained an unbeatable initiative on the sales front" when it locked in a $2 billion order on Tuesday from Spain's Air Europa for 10 A350s, a plane that has only been marketed for about two weeks, said Richard Aboulafia, an analyst at Teal Group Corp., an aerospace consultancy based in Fairfax, Va.

Aboulafia said the order from JAL, which has the option to buy 20 more, "could break the logjam" at Boeing, whose only other major order for the 7E7 came in April when All Nippon Airways Co. of Japan, known as ANA, purchased 50 of the fuel-efficient planes in a deal worth about $6 billion. The two-aisle 7E7, which will seat between 217 and 289 passengers, is scheduled to begin service in 2008.

A key factor behind Boeing's dominance in Japan is that several of the country's heavy machinery makers are helping develop the 7E7.

Denver-based aviation consultant Michael Boyd called the marketing of the A350, which won't be available until 2010, a "desperation" move by Airbus to prevent existing customers from switching to Boeing's 7E7, which is more fuel efficient than Airbus' existing midsize plane, the A330.

"If they (Airbus) can knock out the 7E7, Boeing might as well start making rockets again because they're not going to be in the airline business for very long," said Boyd.