AI may shell out Rs 125 cr as penalty to Boeing & Airbus

Mumbai: Air India, the national carrier and the country’s largest by fleet size, may have to pay a penalty of Rs 125 crore to Boeing and Airbus
for deferring and cancelling earlier orders for buying aircraft from the two international companies.
A total of 70 aircraft from Boeing and Airbus will be deferred and a few orders will be cancelled, according to two people close to the development, resulting in a penalty of about Rs 125 crore.
Air India will also stand to lose Rs 15-20 crore additionally as interest, because National Aviation Co of India (Nacil), the holding company for the carrier, had made pre-delivery payments to Airbus and Boeing. All these aircraft was supposed to be added to Air India’s fleet by 2011 and now will be deferred till 2015, the persons added. When contacted, an Air India spokesperson said the company would inform once a decision is taken. An Airbus spokesperson said delivery timetables and other contractual issues with customers are confidential.
The Air India penalty payment comes at a time when Tata Motors is also likely to pay Rs 300 crore for JLR’s breach of a raw material purchase contract with Ford. As in all contracts, when carriers sign aircraft purchase agreements with manufacturers such as Boeing and Airbus, there are penalty clauses, if the purchaser fails to pay or if there is any deferment in the order. With Air India currently passing through one of its most trying times, the company has decided to defer and cancel few future deliveries, triggering the penalty clause.
“The cancellation and deferment will happen in phases,” said one Air India official. “In the first phase, the company has delayed purchase of seven Boeings, which otherwise would have seen a payment of about Rs 8,000 crore. Next, the company may defer 15 new Airbus planes, which were scheduled to be inducted toward the end of fiscal 2010,” the official added.
20/07/09 Mithun Roy/Economic Times

To Read the News in full at Source, Click the Headline

Categories: Foreign Jul 2009, NACIL Jul 2009