Dreamliner Grounding Hits ANA, JAL, Component Makers

TOKYO--Shares of All Nippon Airways Co. (9202.TO) and Japan Airlines Co.(9201.TO) fell in early Tokyo Stock Exchange trading after both companies grounded their entire fleets of Boeing Co.(BA) 787 Dreamliner passenger jets on Wednesday.

ANA was off 1.6% at Y179, while JAL slipped 1.2% to Y3,630.

The airlines grounded the jets after an ANA Dreamliner made an emergency landing during a domestic flight in southwestern Japan on Wednesday, the latest of a string of incidents affecting Dreamliners, including fires and fuel leaks.

Analysts said the impact on the companies would depend on how long the problems and the grounding last.

"It's not as if the planes cannot fly at all; they are simply dogged by relatively small and apparently disparate problems that keep cropping up," says Toshiyuki Kanayama, market analyst at Monex Inc.

"In the past, U.S. aircraft makers would deliver new planes to domestic carriers, which would then provide feedback to have them fixed. The Dreamliner is unique in that Japanese carriers lined up to get the first few deliveries, which essentially makes them the guinea pigs for working out bugs," he added.

ANA and JAL together reportedly canceled nearly 40 flights on Wednesday in which Dreamliners were slated for use.

"The fact that the Dreamliners save as much as 20% on fuel will have a impact on profit margins, especially as such costs rise," adds another analyst at a foreign brokerage. "If the grounding is prolonged, this would obviously begin to have an effect on carriers' bottom lines. But until the root of the problems is decisively determined and/or a production halt is declared, component makers should not be too dramatically affected, and the planes should not be sidelined for long."

Select Japanese component suppliers to the Dreamliner were also lower, with carbon fiber maker Toray Industries (3402.TO) down 2.7% to Y496, and battery maker GS Yuasa (6674.TO) off 6.7% at Y299.

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