Indian flag-carrier Air India is
with American aircraft manufacturer Boeing (
) over compensation for the delayed delivery of new 787
Boeing's revolutionary 787 Dreamliner has been fraught with three
years worth of
. Design flaws in the carbon fiber-reinforced plastic model, as
well as supply chain mishaps, prevented the aircraft from
debuting on time. In addition to "Dreamliner," the 787 has been
because of its ability to fly long, thin routes profitably.
Air India's demands for compensation are not
. Other 787 customers such as
All Nippon Airways
have received compensation under similar circumstances.
However, Boeing prefers compensation to be done through discounts
on other models of Boeing aircraft as opposed to cash
But because Air India is currently in
very poor fiscal health
, the state-owned carrier would prefer its compensation in cash.
This week, Air India received a 67 billion rupee ($1.3 billion)
from the Indian government. A cash compensation from Boeing would
substantially improve Air India's poor debt profile.
Air India's financial problems reflect the difficulty of
operating profitably in the difficult Indian airline sector.
Increased competition from start-ups like Jet Airways, IndiGo,
Spicejet, and Kingfisher Airlines have spawned a brutal far ware
that has all but
Air India has struggled to adapt from its previous monopoly as
India's only international airline, but its lack of dynamism
stemming from considerable government bureaucracy has caused the
airline to suffer financially.
As it is government-owned, Air India Limited does not trade.
Boeing closed slightly higher yesterday.