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AI Board discusses compensation claim from Boeing

Source: PTI
May 28, 2012 17:03 IST
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Air IndiaWith the delivery of new-generation Boeing 787 Dreamliner aircraft scheduled soon, the issue of over $700 million compensation from US manufacturer Boeing for delaying its delivery came up for detailed discussion at the Air India Board meeting in New Delhi on Monday.

The entire issue of compensation, including the amount to be claimed and how, has been forwarded to the government for approval, sources said, adding that matter came up for a thorough discussion at the meeting of the Board, sources said.

However, they did not disclose the amount to be claimed from Boeing on grounds of confidentiality in negotiations.

The first of the 27 Dreamliners ordered by Air India is ready for delivery and a team of pilots is likely to visit Boeing headquarters in Seattle, US, shortly to fly it down.

The national carrier had placed order to buy 27 B-787s and 41 B-777s in 2005 and as per the original schedule, the US aircraft maker had to commence the delivery of these aircraft from September, 2008. Delivery of the Dreamliners was delayed because of various factors, including labour trouble in Boeing.

The sources said the issue of the pilots' strike which entered the 21st day, was briefly reviewed by the Board.

The issue of a voluntary retirement scheme for Air India staffers was not on the agenda, they said.

Asked whether the national carrier would take delivery of the B-787s before the compensation amount was finalised, the sources indicated that technically all issues should be firmed up before the delivery papers were signed between an airline and the manufacturer.

Two years ago, while deposing before the Parliamentary Standing Committee headed by Communist Party of India-Marxist leader Sitaram Yechury, Air India's then CMD Arvind Jadhav had said, "we have slapped a compensation claim of $710


Obviously, they have confirmed $145 million they will pay as compensation for the delay and so we have tried to push the entire delivery."

However, the sources said this was the estimation as of March 2010 and the figures could vary now.

The state-owned carrier has already invited proposals from banks and financial institutions to raise short-term loans upto $500 million to take delivery of first few Dreamliners by December this year.

The issue of monetisation of Air India's assets in India and abroad and appointing a real estate consultant for the purpose was also discussed by the Board, the sources said.

The Board has already decided to monetise Rs 5,000 crore (Rs 50 billion) worth of AI assets over a period of 10 years.

The assets planned to be monetised include those in Mumbai, Chennai, Delhi, Nairobi and Mauritius.

The airline Board considered the next steps to deal with the pilots strike, spearheaded by the now derecognised Indian Pilots Guild, the sources said.

The airline has sacked 101 pilots and is mulling hiring new pilots to restore normalcy its flight schedules, particularly international operations which have been curtailed due to the agitation.

Appeals by Civil Aviation Minister Ajit Singh asking the pilots to get back to work have not yielded results with the protestors insisting that the airline first reinstate all the sacked pilots before they resume duty.

While Delhi high court has restrained them from going on strike or reporting sick and asked them to return to work, Bombay high court has also ticked off the IPG for persisting with the strike by defying court orders, thereby inconveniencing passenger.

IPG has been at loggerheads with the AI management over its decision to let erstwhile IA pilots to train on advanced Boeing 787 Dreamliner aircraft.

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