Airbus close to landmark jet order with Japan Airlines

Breaks into last major aviation market dominated by rival Boeing Co

Airbus appeared close on Monday to winning its first jet order from Japan Airlines Co Ltd, breaking into the last major aviation market dominated by rival Boeing Co, two sources familiar with the matter said.

The deal is expected to involve the sale of A350 aircraft to Japan Airlines and follows an intense battle between the planemakers as Japan's two top carriers seek dozens of new long-haul jets over the next decade, the sources said.

They gave no details on the number of planes expected to be sold, but industry analysts previously told Reuters they expected the carrier to order around 25 aircraft in a contest that pitted the A350 against Boeing's yet-to-be-launched 777X.

JAL said its president, Yoshiharu Ueki, and Airbus Chief Executive Fabrice Bregier would hold a news conference in Tokyo at 0600 GMT. It did not say what would be announced.

In France, Airbus said it would give a telephone briefing at 0430 GMT. A spokesman for EADS subsidiary Airbus declined further comment.

"It looks as though JAL has decided to go with Airbus," one of the sources said, declining to be identified because of the sensitivity of the matter.

For decades, Boeing has seen off attempts by Airbus to secure an order with Japan Airlines, benefiting from links with Japanese suppliers and deep political and defence ties between Japan and the United States to maintain a market share of more than 80%.

The two aircraft makers are still battling for a similar order at ANA Holdings Inc, which is also looking for around 25 new jets to replace its aging fleet of long-haul Boeing 777s from 2020.

DELIVERY RISKS

ANA's boss, Shinichiro Ito, told Reuters last month that his airline would consider possible delivery delay risks when choosing.

Delays to deliveries of Boeing's 787 Dreamliner, which is one-third built in Japan, and its subsequent grounding because of overheating batteries may have made Japan's airlines wary of being a launch customer for the 777X, giving Airbus a rare opening in Boeing's best market.

Industry sources said in August that the U.S. planemaker had edged ahead in a see-saw contest with its European rival as it defends dominance in Japan.

But both sides have been seen as striving to win coveted endorsements for their latest long-distance jets from JAL and ANA.

A deal of around 25 of the A350 aircraft would be worth $7 billion to $8 billion at list prices, depending on the type.

Boeing is looking for Japanese support for a proposed revamp of its best-selling 777 long-haul jet, while Airbus is pushing a larger version of its upcoming A350 aircraft, whose base model enters service in 2014.

Japanese suppliers including Mitsubishi Heavy Industries Ltd and Kawasaki Heavy Industries Ltd, which account for one-third of the 787, are expected to join the 777X programme too, although Boeing has yet to say how much work they will get.

Airbus sales chief John Leahy told Reuters last month he had "not given up" efforts to land new aircraft orders in Japan.

JAL's shares rose as much as 3.4% in early trade to 5,830 yen, compared with a flat Tokyo benchmark Nikkei average.