While the 787 Dreamliner’s flying woes may dominate headlines, the payments Boeing (BA) makes to soothe disgruntled buyers of the new plane are typically handled in much quieter fashion. But the first European customer for the 787, LOT Polish Airlines, is taking its demand for compensation public.
The issue surfaced after an earnings conference call last week in which Boeing Chief Executive Officer W. James McNerney declared settled all the customer-payment requests from the 787's three-month grounding. “There were some instances where we had obligations to customers, and those have all been satisfied,” McNerney told investors and reporters during the July 24 call. “And you can see by our quarterly results that there was no significant impact to our operations as we work with our customers to remedy the situation. He added: “We think they are all behind us now.”
The Polish airline begs to differ. “Maybe this did not have any impact on the profit side of Boeing, but in fact we were not satisfied at all financially,” LOT spokesman Robert Moren says in a telephone interview conducted on Monday. “Those [costs] are not probably gigantic money for Boeing, but for us—while we are in the process of restructuring—it’s quite substantial.”
Payments by airplane manufacturers for such new-plane issues always come with a certain amount of legalistic haggling, veering into the public domain only when it potentially serves the interest of a financially squeezed airline. In March 2012, for example, Boeing reacted swiftly to deny a statement from the Indian government that the company had agreed to pay $500 million over 787 delivery delays to Air India.
30/07/13 Justin Bachman/Business Week
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The issue surfaced after an earnings conference call last week in which Boeing Chief Executive Officer W. James McNerney declared settled all the customer-payment requests from the 787's three-month grounding. “There were some instances where we had obligations to customers, and those have all been satisfied,” McNerney told investors and reporters during the July 24 call. “And you can see by our quarterly results that there was no significant impact to our operations as we work with our customers to remedy the situation. He added: “We think they are all behind us now.”
The Polish airline begs to differ. “Maybe this did not have any impact on the profit side of Boeing, but in fact we were not satisfied at all financially,” LOT spokesman Robert Moren says in a telephone interview conducted on Monday. “Those [costs] are not probably gigantic money for Boeing, but for us—while we are in the process of restructuring—it’s quite substantial.”
Payments by airplane manufacturers for such new-plane issues always come with a certain amount of legalistic haggling, veering into the public domain only when it potentially serves the interest of a financially squeezed airline. In March 2012, for example, Boeing reacted swiftly to deny a statement from the Indian government that the company had agreed to pay $500 million over 787 delivery delays to Air India.
30/07/13 Justin Bachman/Business Week
