The Government of India on Wednesday said Boeing had agreed to pay Air India a $500 million compensation for the four-year delay in delivery of the 787 Dreamliner aircraft. However, the US company said the announcement was news to it.
"I think if we'd settled for $500 mn, somebody would have told me," Jim Albaugh, president of Boeing's commercial aircraft unit said on Wednesday at an aviation meet in New York. "We don't comment on deals that we've done, but I can tell you that we're not writing anybody a cheque for $500 mn."
That was after Prashant Sukul, the government's joint secretary (civil aviation), told journalists after the inauguration of the India Civil Aviation Air Show in Hyderabad that the US company had said it would pay the amount on the long delay in delivering the 27 Boeing 787's the government carrier had ordered. Rohit Nandan, the chairman of AI, was present.
"The compensation demand from Air India is $1 billion. Two weeks back, they (Boeing) agreed to pay a little over $500 million," said Sukul, adding, "We are asking for more, we are talking to them."
Albaugh's retort, broadcast on the internet, too, put a stop to calculations on how the amount would come very handy in staunching the government carrier's flow of red ink. Boeing's India head, Dinesh Keskar, declined to comment when asked whether the plane maker was compensating for the delays.
Negotiations for the compensation have been on for quite a while and the government was learnt to have pressed for $1 billion. AI had placed an order for 27 Boeing 787s and was to get these from 2008. Boeing had then committed to delivery in October-December 2011, but that didn't happen, too.
"The first 787 is expected to be delivered in May," said Nandan. He said seven Boeing 787s would come by next March. Adding: "The aircraft should have come in 2008. Our turnaround plan, route economics and profitability is based on it."
AI is in a severe financial crisis and is still awaiting the government's permission to induct these planes. One argument within policy circles is that it would be better to cancel a large part of the number ordered, given the cash crisis of both AI and the government.
AI is otherwise expecting Rs 5,500 crore of additional equity infusion from the government. This will help clear its huge dues. Of the money, Rs 2,500 crore is to be paid to oil companies, Rs 1,200 crore to airport operators and Rs 580 crore for employee salaries, Nandan said.
The airline has got about Rs 3,200 crore in government bailouts since early 2009.
As for the Dreamliner, the total of global orders Boeing had got for these are 868, according to the company's website. It has so far delivered a total of five, all to Tokyo-based ANA. Boeing says its aim is to make 10 a month by the end of next year.
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