Boeing, AI to meet on compensation

A high-level Boeing team will arrive in New Delhi this week to discuss outstanding issues, including compensation, with national carrier Air India after the aerospace giant announced a further six-month delay for the first flight and initial deliveries of its 787 Dreamliner programme.

The team will be led by Dinesh Keskar, senior vice-president, sales, Boeing Commercial Airplanes. With Boeing's revised schedule now pegging the deliveries for the last quarter of 2009, Air India's growth plans have taken a hit.

"The revised delays announced by Boeing will have a significant impact on our growth plan. We have initiated the procedure of computing compensation details and will be filing the same with Boeing," said Jitender Bhargava, executive director, corporate communications, Air India.

The carrier had, till late, refused to seek compensation from Boeing.

Bhargava, however, refused to give any details of the money that Air India will demand from Boeing. "These issues are specified in the purchase agreement with Boeing," he said.

After Boeing revised the schedule a second time to February 2009, Air India had ordered twenty-seven 787s. The first delivery was slotted for September 2008. According to a company press release, Boeing is slated to make 25 deliveries in 2009. It is not clear how many aircraft will Air India get of these.

Though the compensation clause is in-built in the purchase agreement, experts said Boeing would have to take a view of the setback the delay was going to cause to Air India's route expansion and fleet retirement plans.

Hence, apart from compensation, Boeing will also have to factor in the impact of the delay on the carrier's growth plan when computing for the same.

"Air India will now have to reprocess its capacity addition plans. The new 787s were supposed to substitute some of the aircraft that have been leased by us and also to phase out the old aircraft in the fleet. We might have to increase our leased capacity and also sign fresh lease agreements. The markets are not the same anymore and leasing an aircraft has become difficult and expensive. There is a downside in the supply too. The airline will take a financial impact," said Bhargava.