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Boeing Hands 21% of 777X Components to Japanese Suppliers

Boeing Co. (BA) retained the work of Mitsubishi Heavy Industries Ltd. (7011) and Kawasaki Heavy Industries Ltd. (7012) and said five Japanese companies will build 21 percent of its latest widebody jet 777X.

Fuji Heavy Industries Ltd. (7270), ShinMaywa Industries Ltd. and Nippi Corp. will also be part of the Japanese consortium that signed an initial agreement with Boeing, the manufacturers said in a statement in Tokyo today. The Japanese companies will build parts including fuselage sections, passenger entry doors, landing gear wheel wells and cargo doors, it said.

Boeing has counted on Japanese manufacturers to produce parts for its aircraft with companies in the Asian country making 35 percent of the 787 Dreamliner and 21 percent of the 777 widebody jets. The Chicago-based planemaker has long dominated aircraft sales in Japan as a near-monopoly. Rival Airbus Group NV (AIR) managed to make a sale to Japan Airlines Co. for the first time ever last year.

“This agreement with our Japanese partners extends our important and strategic relationship for decades to come,” George Maffeo, president of Boeing Japan, said in the statement.

The 777X will be the successor to Boeing’s popular 777 aircraft. Two models are being offered to customers, the 777-8X and the 777-9X with the latter under development. Production is due to commence in 2017 and delivery of the first aircraft in 2020, according to the statement by the parts makers.

Photographer: Tomohiro Ohsumi/Bloomberg

Hideaki Omiya, chairman of Mitsubishi Heavy Industries Ltd. and chairman of the Japan Aircraft Development Corporation, left, shakes hands with Ray Conner, president and chief executive officer of Boeing Commercial Airplanes, during a news conference in Tokyo. Close

Hideaki Omiya, chairman of Mitsubishi Heavy Industries Ltd. and chairman of the Japan... Read More

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Photographer: Tomohiro Ohsumi/Bloomberg

Hideaki Omiya, chairman of Mitsubishi Heavy Industries Ltd. and chairman of the Japan Aircraft Development Corporation, left, shakes hands with Ray Conner, president and chief executive officer of Boeing Commercial Airplanes, during a news conference in Tokyo.

Japan is the largest supplier for the 777 after the U.S., Ken Fisher, Boeing commercial vice president and general manager of supplier management, told reporters today.

Dreamliner

Mitsubishi Heavy makes the wings and Kawasaki Heavy and Fuji Heavy assemble a front fuselage section and center wing boxes for the Dreamliner. GS Yuasa Corp. (6674) of Japan makes batteries for the aircraft.

Boeing is increasing work in the U.S. with the 777X. The company said in January it would manufacture the jet’s all-composite wing near its Seattle-area commercial hub, in exchange for union concessions guaranteeing labor peace through 2024.

The 777X has become the fastest-selling wide-body in Boeing’s history, with 300 orders announced since its November debut, following Boeing’s promises that shared roots with the 777-300ER would cut manufacturing risk and increase savings.

The 777 is already Boeing’s biggest twin-engine jet, and the 777X will have a wingspan of 233 feet (71 meters).

The 777-9X will haul a jumbo’s load of 400 people -- 50 more than the A350-1000 from Toulouse, France-based Airbus -- while flying farther and at less cost, according to Boeing. The company projects a 10 percent savings for each seat flown a mile, the industry benchmark for efficiency.

The list price of the 777-9X is $377.2 million, while the -8X is $349.8 million. The biggest current model, the 777-300ER, retails for $320.2 million.

To contact the reporters on this story: Masumi Suga in Tokyo at msuga@bloomberg.net; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net; Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net Dave McCombs

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