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AI seeks $1 bn from Boeing

A miffed Air India management has slapped a notice on aircraft manufacturing major Boeing demanding compensation of about $ 1 billion for the persistent delay on deliveries of planes. Gaurav Choudhury reports. AI's nightmare

india Updated: Aug 10, 2010 21:44 IST
Gaurav Choudhury

A miffed Air India management has slapped a notice on aircraft manufacturing major Boeing demanding compensation of about $ 1 billion (about Rs 4,600 crore) for the persistent delay on deliveries of planes.

AI had placed an order for 27 B-787 Dreamliners. According to the original schedule, the first such aircraft was to be delivered in September 2008 followed by one each in each of the subsequent months.

By March 2011, Boeing was scheduled to have delivered 18 of these premium aircraft to India’s state-owned carrier.

It now appears, however, that the first of these aircraft will arrive only in April next year forcing the airline, already battling with a bleeding balance sheet, to slap a compensation notice to the Seattle based aviation giant.

The compensation sought comes to about half of the airline’s accumulated loss.

Arvind Jadhav, chairman and managing director of National Aviation Company of India Ltd (Nacil)—the entity that runs Air India—did not respond to HT’s phone calls and text messages.

The compensation has been worked out based on computing of direct cost per day of delay and increased cost of operations using 25 old aircraft.

Dinesh Keskar, President, Boeing India, refused to comment. “Boeing, as a policy, doesn’t comment on compensation issues in the media,” Keskar said.

The issue was discussed by the NACIL Board, which met here last Saturday. A decision was taken to form a special management team to conduct negotiations with Boeing and to seek a compensation of between $710 million (about Rs 3,266 crore) to $ 1 billion (Rs 4,600 crore) instead of the $145.8 million (about Rs 670 crore) being offered by it.

The Board also decided it would take up with the company, the issue of doubling the compensation amount being paid every day from $15,000 (Rs 6.9 lakh) to $30,000.

(With inputs from Tushar Srivastava)