Air India board refers Boeing compensation issue to govt

No discussion on pilots? strike panel formed to recommend on route rationalisation

BS Reporter / New Delhi May 29, 2012, 00:23 IST

The board of directors of Air India, in a meeting on Friday, referred the issue of Boeing’s compensation offer to Air India for a delay in the delivery of Dreamliner aircraft, including the amount to be claimed and how, to the civil aviation ministry.

“We hope the government approves the compensation package soon, as the deliveries can only start after the package is approved,” said a board member, without discussing the details, calling it commercially-sensitive information

The meeting, though, ended without any official word on the way forward in resolving a three-week pilots’ strike, which is bleeding the airline. “Both the independent members on the board could not attend the meeting and the rest of us (functional directors and government nominees on the board) do not need a board meeting to discuss the strike. We discuss the strike on a regular basis,” he said.

Chairman and managing director Rohit Nandan, a bureaucrat, chaired the meet. AI is owned by the government, and civil aviation minister Ajit Singh has, so far, taken a tough stand on the striking pilots. The stir is related to promotions in flying Boeing’s Dreamliners, with the pilots opposing their counterparts in the erstwhile Indian Airlines flying these aircraft. The two airlines were merged, but this has not been done smoothly.

AI had ordered 27 Boeing 787 Dreamliners in 2005. The delivery has been delayed by more than three years and the aircraft manufacturer has to compensate the carrier. “The compensation (offer) from Boeing has been forwarded to the government for approval,” said an official present in the meeting.

According to unconfirmed reports, the carrier had asked for compensation for $1 billion (Rs 5,500 crore, at Rs 55 to a dollar) and Boeing had agreed to pay $500 million (Rs 2,250 crore).

The first of the 27 Dreamliners ordered is ready for delivery and a team of pilots is likely to visit Boeing headquarters in Seattle, America, shortly to fly it down. The state-owned carrier has already invited proposals from banks and financial institutions to raise short-term loans up to $500 million to take delivery of the first Dreamliners by June. The board also discussed monetisation of AI’s assets in India and abroad, and appointment of a real estate consultant. The board has decided to monetise Rs 5,000 crore worth of AI assets over 10 years. The assets to be sold include those in Mumbai, Chennai, Delhi, Nairobi and Mauritius.

Pilots’ stir, routes
The pilots’ strike has so far led to a revenue loss of Rs 300 crore. The airline has dealt with the agitating pilots strictly, dismissing 101 and de-recognising their union, the Indian Pilots’ Guild (IPG). It is mulling hiring new pilots to restore normalcy in its international flight schedules and discussing getting planes on a wet lease.

A PTI report says the airline is likely to reopen international bookings and have a fresh operating schedule by this weekend, with the help of 130 executive pilots. Minister Ajit Singh has decided to not meet the pilots till they call off the strike. The pilots first want an assurance on reinstating the dismissed pilots.

Meanwhile, the minister has set up a committee to examine the various routes and their profitability. “The committee will make its recommendations keeping in view the overall objective of profitability and submit its report in a week,” said the ministry. The panel is to be chaired by G Asok Kumar, joint secretary in the ministry. It will recommend withdrawal/continuance of flights during the current summer schedule and on how to make these profitable

http://www.business-standard.com/india/news/air-india-board-refers-boeing-compensation-issue-to-govt/475644/