Japan's All Nippon Airways (ANA) said Friday it would order 11 more Boeing 787 Dreamliners, with a list price of around $2.68 billion, hoping the fuel-efficient aircraft will help cut costs.
The announcement comes as Japan's once cosseted airline industry faces rapid change with the entrance of several low-cost carriers.
"ANA currently has 55 Dreamliners on order, 13 of which have so far been delivered, and the new order today will take ANA's fleet of this innovative and fuel-efficient airliner to 66," ANA said in a statement.
The carrier, Japan's biggest by passenger numbers, said all of the new aircraft will be B787-9 and are expected to be delivered between 2018 and 2021.
"ANA's future fleet plans involve the gradual replacement of the Boeing 767 and Boeing 777-200 with the 787," the company said.
"The fuel efficiency of the B787-9 is similar to that of the B787-8, while it has greater seat capacity, helping support the profitable expansion of ANA's international and domestic route networks."
The company gave no value for the order, but airlines rarely pay the list price for planes.
The airline got its first 787 in October last year and is now flying the plane on eight domestic routes, as well as from Tokyo's Haneda airport to Frankfurt in Germany.
Plans are in place for the 787 to be used on a new Tokyo to San Jose route, and to replace aircraft currently used on the service to Seattle from October 1. From October 28, the Haneda to Beijing route will use the Dreamliner, the company said.
However, an ongoing territorial row between Japan and China over disputed islands in the East China Sea has badly dented demand for flights between Asia's two largest economies.
ANA said Tuesday 18,800 seat reservations had been cancelled on routes between the two countries for the three months to November.
The carrier said in August that it was back in the black, logging a net profit of 668 million yen ($8.55 million) in its fiscal first quarter to June, reversing a year-earlier loss, thanks to increased travel demand.
It had seen an 8.1 billion yen operating loss in the first quarter of last year as passenger demand collapsed in the aftermath of the March 11 earthquake-tsunami and meltdowns at the Fukushima Daiichi nuclear plant.
But cost cutting and a recovery in international travel demand helped the airline post a record operating profit of $1.2 billion in the fiscal year ended in March.
ANA said international flight sales rose more than 20 percent on year in the latest quarter.
Japan's aviation market has long been dominated by ANA and rival Japan Airlines (JAL), but this year has seen the launch of a number of new cheap carriers that could challenge that supremacy.
Both airlines have themselves invested in the new budget start-ups.
ANA last year set up Peach Aviation with a Hong Kong investment fund, while JAL announced a tie-up with Australia's Qantas to launch Jetstar Japan.
AirAsia Japan -- a joint venture between ANA and Malaysia's budget firm AirAsia -- has also launched its lower-cost service.
In its earnings report ANA said it saw a host of other challenges for the year to March 2013 including rising oil prices and exchange rate fluctuations.
In July the company stole the march on JAL's refloating, which happened Wednesday, with a new share issue that saw it offer 914 million new shares.
The issue raised 173 billion yen, which the company at the time said would be used to fund the expansion of its fleet.
Ahead of Friday's announcement, ANA closed flat on the Tokyo Stock Exchange at 176 yen.
The Dreamliner was touted as the great new hope for US manufacturer Boeing, which says its next-generation composite fibre body reduces weight and boosts fuel efficiency.
But it has been hit by a series of glitches, including test engine trouble in July that was the subject of a probe by the US National Transportation Safety Board.
On July 23, ANA said it was grounding five 787 Dreamliner jets for repairs because of a defect on the Rolls-Royce engine.
In February, Boeing said around 55 Dreamliners were at risk of developing a fuselage problem.
