All Nippon Airways (ANA), Japan’s second-biggest airline, will scrap plans to buy the Airbus A380 as it and bigger rival Japan Airlines slash capital spending, a newspaper reported on Monday.
The global economic downturn has been hitting airlines as fewer people travel for business and leisure, forcing carriers to review capital spending and ditch less profitable routes.
Japan’s Yomiuri newspaper, without citing sources, reported that ANA would cut capital spending by JPY100 billion yen to JPY200 billion (USD$1.09 billion to USD$2.18 billion) from a planned JPY900 billion in the four years to March 2012.
ANA, which has been considering adding the Airbus A380, Boeing’s 747-8 and others to its fleet from fiscal 2012, said that while it has postponed choosing new aircraft, it has not cancelled its plans.
“As we said in December, the decision has been postponed and not scrapped,” said ANA spokesman Rob Henderson. He added that the evaluation process would remain on hold until business conditions become more positive.
In Europe, Airbus said it understood the postponement announced in December.
“We hope ANA will resume its large aircraft selection process as soon as the financial market situation brightens. We are convinced the A380 has already demonstrated lower operating costs and excellent revenue opportunities,” a spokesman said.
The A380 entered service at the end of 2007.
ANA spokeswoman Nana Kon said the company had no comment about the change in its capital spending plans as reported in the Yomiuri.
ANA is reviewing its business plans and aims to announce them, including a possible change in its capital spending budget, by early February, Kon said.
The economic slump has taken a toll on the airline industry. Last week the International Air Transport Association (IATA) said international airlines saw a 13.5 percent fall in cargo traffic in November and a 4.6 percent drop in passengers.
Japan Airlines (JAL), Asia’s largest carrier, said last month that it may reduce its capital spending budget for the three years to March 2011 by nearly a quarter, prompted by falling demand for international flights.
ANA, meanwhile, cut its full-year operating profit forecast by about one-third in October, saying business conditions were likely to get tougher in the latter half of the business year.
An Airbus sale in Japan would be a big breakthrough for the European plane maker, since it has only about 4 percent of the Japanese market, compared with a 50 percent share elsewhere.
Nikkei business daily had reported in July that Airbus would sell five A380s to ANA, its first sale of the world’s biggest passenger plane to a Japanese airline.
The ANA campaign has been central to a battle between Airbus and Boeing on two fronts, according to industry executives.
There is a battle for market share as Airbus tries to break Boeing’s longstanding dominance of the Japanese market.
And a battle is being waged globally over the future of Boeing’s most recently launched model, the Boeing 747-8.
This is an enhanced jumbo jet designed to defend Boeing’s position in the large-capacity segment from the 525-seat A380 — even though the plane makers disagree over the importance of this market, with Boeing focusing mainly on the 250 to 350 seat range.
The 747-8 boasts increased fuel efficiency and is popular with freight carriers but has only one traditional airline customer for its passenger version, Germany’s Lufthansa.
Many airlines hesitate to invest in new models until they have at least two customers to reduce maintenance risks, so getting a second buyer has been seen as vital for Boeing which has so far said it remains committed to building the plane.
Airbus scored a pre-emptive victory last year when it fought efforts by Boeing to make Abu Dhabi’s Etihad the all-important second 747-8 customer, selling it more Airbus A380s instead.
Etihad nonetheless did place a USD$9 billion order for Boeing’s mid-sized wide-bodied jets, including 35 new 787s.
ANA is set to be the first carrier to fly the lightweight 787, which has been delayed by up to two years by production problems and a strike.
