Douglas Captures $2.2-Billion Order From Japan Air
Japan Airlines has ordered 10 McDonnell Douglas MD-11 jetliners, with an option for 10 more, in a contract that could be worth as much as $2.2 billion for the aerospace company, both companies announced Friday.
In placing its order, Japan Airlines joined a flock of airlines in a holding pattern waiting for the tri-engine aircraft, for which McDonnell Douglas’ Long Beach-based Douglas Aircraft division now has a backlog of 126 firm orders. JAL expects to receive its first MD-11 in mid-1993.
The order boosts the fortunes of McDonnell Douglas, which beat out the European consortium Airbus Industrie for the JAL contract. “It’s a nice win,” said Peter Aseritis, an industry analyst with First Boston Corp. in New York.
The MD-11 made its first test flight Jan. 10, and the planes are expected to receive Federal Aviation Administration certification and to begin commercial operations before the end of this year.
The order also intensifies the competition between McDonnell Douglas and its chief domestic rival, Boeing Co. Boeing hopes to come out with its proposed 777 wide-body jet, which would go head to head with the MD-11, in the first half of 1995.
Boeing is talking with more than half a dozen major airlines, hoping to obtain the orders necessary to launch the jet, and JAL is considered a good prospect, analysts said.
The MD-11s, which cost roughly $100 million each, will replace JAL’s aging fleet of 20 McDonnell Douglas DC-10s--the largest such fleet outside the United States, JAL spokesman Morris G. Simoncelli said. JAL’s DC-10 fleet includes jets flown by its wholly owned subsidiary, Japan Asia Airways.
Simoncelli declined to discuss why McDonnell Douglas prevailed over Airbus, except to say that the MD-11 “suited our needs the best.” Analysts said it made sense for the airline to stay with the same manufacturer for the DC-10 replacements. JAL has been a Douglas customer since the airline was founded in 1951.
Simoncelli denied that JAL chose the U.S. company out of concern for easing U.S.-Japan trade frictions. “We’ve always purchased our aircraft based solely on merit,” he said.
He declined to discuss JAL’s plans with regard to Boeing. JAL operates the world’s largest fleet of Boeing 747s, with 68 of the jumbo jets in operation and 15 more on order.
No decision has been made on what routes the JAL MD-11s will ply, although McDonnell Douglas said the airline is considering various configurations. The wide-body jet, which was developed over three years at a cost of more than $500 million, can carry up to 323 passengers. Its range is up to 8,000 miles depending on load.
JAL’s contract is the third so far this year for the MD-11. Earlier, Singapore Airlines and KLM Royal Dutch Airlines placed commitments for a total of 35 jets, McDonnell Douglas said. Other customers include American Airlines and Delta Air Lines.
In addition to the 126 firm orders, airlines have taken options and made “other commitments” on another 214 of the jets--enough for several years of steady work in Long Beach.
Simoncelli said recent reports of weight problems on the MD-11 did not play a factor in JAL’s decisions. The Times has reported that the MD-11 is at least 4,000 pounds over its target weight. Keith Takahashi, a McDonnell Douglas spokesman, said the company is working aggressively to reduce the jet’s weight.
Two MD-11s are undergoing flight testing, which is on schedule, analysts said.
Since its maiden flight Jan. 10, the first MD-11 has already logged 132 hours of flight in 69 sorties, the longest a trip of 8 hours 40 minutes. The second jet has logged 42 flight hours in 19 outings, Takahashi said.
