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Friday, August 13, 2010

Air India demands $1 billion for Dreamliner delay

The interior of the Boeing 787 Dreamliner is seen on display prior to the opening of the Farnborough International Airshow
Flagship carrier Air India said this week it wants compensation from Boeing for delays in the delivery of Dreamliner planes, with media reports saying the airline is demanding $US1 billion ($A1.1 billion).

Boeing officials were unavailable for comment, but country head at Boeing Dinesh Keskar said earlier in the month that state-run Air India was eligible for compensation for delays in receiving the next-generation plane.

An Air India spokesman said the amount of compensation sought was still being finalised, but media reports placed it at one billion dollars.

The delays in delivery of the Dreamliner come as the loss-making carrier faces fierce competition from local privately-owned rivals, such as Kingfisher and Jet.

Deliveries of 27 Dreamliner 787 aircraft, a model which promises greater fuel efficiency thanks to its lightweight material, have been pending since 2008.

The first plane was to be delivered in September 2008. By March 2011, Boeing was scheduled to have delivered 18 of the aircraft.

But in January, Boeing said it could supply the first Dreamliner aircraft to Air India by the second quarter of 2011, and that more planes would be delivered later.

The Hindustan Times reported that Boeing was offering $US145.8 million in compensation.

Air India has been struggling to cut losses as it battles competition from low-cost airlines and rising fuel costs.

The airline said it is hopeful of swinging into profit in 2014-15 as its five-year turnaround plan takes shape.

Air India's once-dominant market share has shrunk to 16.9 per cent in the face of fierce competition from private and low-cost carriers that have taken to the air since India liberalised its commercial aviation sector in the 1990s.

The Dreamliner is already over two years behind in its production schedule.

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