Boeing to pay USD 500 mn to Air India

Hyderabad: Aircraft maker Boeing has agreed to pay USD 500 million as compensation to Air India for delaying the delivery of Dreamliner aircraft, according to a senior Civil Aviation ministry official.

"The compensation demand from Air India is one billion dollars. However, Boeing has agreed to pay USD 500 million as compensation for the delay," Prashant Shukul, Joint Secretary in the Ministry of Civil Aviation told reporters on the sidelines of India Aviation 2012 here today. The government is trying to push Boeing to pay more, he added.

State-run Air India has sought a compensation package from the US aircraft maker for delay in the delivery of Boeing 787 Dreamliners. The package would be a mix of both discount in services and cash, a senior official had said earlier. Air India had placed orders for 111 aircraft at an investment of over USD 13 billion with Airbus and Boeing in 2006 to replace its ageing fleet and leased planes.

Air India had ordered 27 Dreamliners and Boeing failed to stick to the delivery schedule. As per the original delivery schedule, Boeing was to start delivery from September 2008. However, it failed to meet the timeline due to issues with its vendors and industrial dispute with workers. The company has now rescheduled the delivery to second quarter of 2011.

Dinesh A Keskar, senior vice president, sales Asia Pacific and India, Boeing India, refused to comment on the development. "The issue is between the company and Air India. It will not be discussed outside, Keskar said in press conference today. Keskar said the delivery of Dreamliners to Air India will start in the next quarter and the pilots are being trained.