AI may seek $700 m reparation from Boeing for delivery delay

New Delhi: With Air India considering seeking a compensation of over $700 million from Boeing for delay in delivery of 787s and also planning to cancel delivery of six Boeing 777s, the President of Boeing India, Dr Dinesh Keskar, met with the Chairman and Managing Director of Air India, Mr Arvind Jadhav, in Mumbai on Friday.
Air India had ordered 68 aircraft, including 27 B787s, 23 B777s and 18 B737s, from the US-based manufacturer at an estimated Rs 35,000 crore in 2006. The delivery of the aircraft started in December 2006 with the arrival of the first Boeing 737-800.
A senior airline official, however, said the meeting on Friday was to work out the airline’s fleet requirement keeping in mind the global crisis. Sources indicated that the airline’s viewpoint will emerge only on August 7 when the CMD is scheduled to hold a press briefing here.
Sources also indicated that Boeing will not comment on the matter till Air India has spoken on the issue.
At a recent press conference earlier this month, Dr Keskar said no discussions had yet been held with the airline for payment of compensation or cancellation of aircraft deliveries.
Analysts pointed out that generally any contract for purchase has financial liabilities on both parties. Sources indicated that the multi-million dollar compensation being sought by the airline is an “opportunity cost”.
Simply put, this is the cost of losing potential revenues the it would have earned by transporting passengers to new destinations in Australia, Europe and Africa had the aircraft been delivered on time.
31/07/09 Business Line

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Categories: Foreign Aug 2009, NACIL Aug 2009