All Nippon to replace 53 aircraft with 777-300ER's

Bloomberg.com

All Nippon Airways Co., Asia’s second- largest airline by sales, said it may use Boeing Co.’s 777-300ER aircraft to replace 53 of its largest airplanes, passing over the A380 model made by Airbus SAS.

All Nippon wants to use a single aircraft model to replace 23 Boeing 747-400 planes, four 747 SR/LR models, eight 777-300 and 17 Boeing 777-200, in an order valued at $13 billion at list prices. The Tokyo-based airline may decide on the fleet renewal in February 2006 when it announces its mid-term management plan, said All Nippon’s President Mineo Yamamoto.

“We are also studying the A380, but the 777-300ER is the most likely,” Yamamoto said yesterday at an interview in central Japan’s Nagoya city. “Consolidating large-size planes into one model using the 777 may be the best way to improve our cost structure.”

All Nippon’s selection of Boeing’s models, adding to 135 it owns in a 186-aircraft fleet, underscores the challenge faced by Airbus’ Japan President Glen Fukushima in selling planes to the nation’s carriers. The airline, which in March completed a three- year, 30 billion yen ($2.8 billion) cost-cutting plan 12 months ahead of schedule, is reorganizing its fleet and routes to cut costs and compete with larger competitor Japan Airlines Corp.

Jet fuel may rise 7.5 percent to an average $57 a barrel this year, All Nippon said, making it more imperative to use aircraft models that are more fuel-efficient and to reduce aircraft models to three, from eight

“Fuel efficiency and light-weight planes are the keys to our selection at a time when fuel prices are high,” Yamamoto said.

All Nippon’s shares rose 0.3 percent to 340 yen at the 11 a.m. trading pause in Tokyo. The stock has fallen 4.8 percent this year, performing worse than the 4.4 percent gain by Japan Airlines’ shares.

Expansion

All Nippon was the first airline to place orders for Boeing’s proposed 787 planes, which are supposed to use 20 percent less fuel than other models. The carrier last year placed a $6 billion order for 50 Boeing 787 aircraft.

All Nippon has 186 aircraft in its fleet, almost 72 percent of them made by Chicago-based Boeing. To catch up, Airbus hired Fukushima, its first ethnic-Japanese sales chief in the country, to head its local unit.

All Nippon uses the Boeing 747 aircraft, the world’s largest commercial airplane in service, on domestic routes, putting 569 economy-class seats on its busiest flights. The 747-400ER plane can carry up to 524 people in a typical three-class configuration.

Boeing’s 777-300ER aircraft can carry up to 365 passengers. It’s a so-called long range aircraft, with a maximum flying distance of 8,500 nautical miles (15,742 kilometers), almost the same range as the 747-400ER. The aircraft has a catalogue price of up to $245.5 million each, more than the 747.