Boeing : Air India resolve Delivery Spat Over Delayed 787s

It’s not a completely done deal, but the likelihood of Boeing South Carolina delivering its first 787 Dreamliner to Air India this month increased substantially Wednesday.

That’s because Indian Civil Aviation Minister Ajit Singh stood before microphones and cameras in New Delhi and announced that the airline had accepted Boeing’s proposed compensation for more than three years of delivery delays.


Just last week, Singh had said Air India wouldn’t take any of the 27 Dreamliners it ordered in 2005 until the compensation issue had been resolved.

“Air India board has accepted the proposal, they have talked with the management of the Boeing and they have come up with a figure, and now it will go CCEA,” Singh said, referring to the Cabinet Committee on Economic Affairs, which is expected to take up the matter as early as today.

Earlier this year, Air India reportedly was seeking $1 billion, and Boeing was reported to have offered half that sum, which Boeing Commercial Airplanes CEO Jim Albaugh emphatically denied.

Singh declined to reveal the terms of the suggested solution and spent the rest of Wednesday’s news conference addressing the monthlong pilot strike at the government-owned airline, according to a partial recording of his remarks posted by the Indian Broadcast Network.

Saj Ahmad, a consultant with StrategicAero Research in London who has been following the Air India Dreamliner saga closely, believes final approval, followed by the deliveries, is likely.

“There would have to be some very harsh or compelling reason for the CCEA to reject the compensation package now,” Ahmad wrote in an email, “although where that leaves the Air India pilots and the two unions who are at loggerheads over who should be trained up is rather more opaque.”

According to other published reports out of India, Singh also said Air India expects to finally take delivery of its first three 787 Dreamliners from Boeing this month.

Speaking from Delhi, Dinesh Keskar, Boeing’s senior vice president of sales for Asia Pacific and India, declined to comment on the compensation issue, but he confirmed that one of those three jet handovers would be the first from the North Charleston plant.

“I’m looking forward to the delivery,” he said.

That first S.C.-built Dreamliner, which was rolled out on April 27 and flew for the first time on May 23, is being painted in Fort Worth, Texas.

It must return to North Charleston for Air India’s battery of tests before delivery. Neither of those dates has been announced.

Meanwhile, Singh, a veteran politician and computer scientist, said Air India will take several steps to improve its financial position as it inducts the fuel-sipping, half-composite 787s into its fleet.

He said the airline will hire more pilots to replace the 100 it has fired, and will expand its international service, which has suffered serious disruptions as a result of the strike.

The South Asian national carrier has struggled for years with profitability and integrating its workforce after merging with Indian Airlines in 2007. It received a $5.8 billion government bailout in April, but the strike appeared to present an 11th-hour obstacle to the long-anticipated Dreamliner deliveries.

Now, it seems the pilot protest will be an internal issue for the airline, not one that derails Boeing’s deliveries.

“If, as expected, the deal is sealed by the CCEA, there will be a greater likelihood of all 27 787-8s being handed over to Air India with minimal fuss,” Ahmad of StrategicAero Research said Wednesday. “Both airline and Boeing can frankly do without the negative PR, especially Air India given the shambles they’re in.”