Mitsubishi, Kawasaki and Fuji Heavy said Tuesday they had signed a memorandum of agreement with Boeing regarding their role in the development and production of the new 7E7 ?Dreamliner? mid-sized airplane.

Japan is Boeing?s single largest industrial partner in the development of the 7E7 and the three Japanese ?Heavies? are slated to complete 35 per cent of the development and production of the plane.

The country?s participation in the project was put under the microscope this month, when the European Commission in Tokyo called into question the Japanese financial aid Boeing is receiving for development of the 7E7. The EU said that Japan has earmarked $1.6bn in subsidies for the development of the 7E7.

The memorandum is the predecessor to the final contract, which, regarding the three ?Heavies? 7E7 participation, is expected to be signed by the end of the year, said a Boeing spokeswoman Tuesday in Tokyo.

The memorandum includes the ?main contract terms? of the deal, according to a press release issued by the three Heavies and the Japan Aircraft Development Corporation, a consortium of Japanese firms that take part in the development of commercial airplanes.

It is understood that the memorandum stipulated details such as what price Boeing would pay the three Heavies for their 7E7 parts, said a person familiar with the deal.

Mitsubishi Heavy Industries is set to make the 7E7?s wing box, Kawasaki Heavy parts of the forward fuselage and parts of the landing gear, and Fuji Heavy the centre wing box and main landing gear.

Boeing said Tuesday it had not yet signed a memorandum of agreement with its two other partners, Alinia and Vought. Vought, based in Texas, and Alenia, part of Finmeccanica in Italy, are expected to form a joint venture to supply significant parts of the 7E7 fuselage. Together they will account for about 26 per cent of the 7E7? s structure.

But analysts said securing Japanese participation in the 7E7 development deal was the most crucial for Boeing. ?The Japanese heavy industries contribution to this program is critical,? said Lance Gatling, an independent aerospace consultant based in Tokyo.

?The other suppliers for the fuselage are arguably less critical in terms of investment, technology risk and the overall concept of the aircraft.?

All Nippon Airways, Japan?s second leading airline, was the launch customer for the 7E7, ordering 50 planes worth $6bn at list prices. The plane is slated to have its first test flight in 2007 and come into commercial service in 2008.

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