Air India plans to seek $840 million for Boeing delay

National Aviation Co. of India Ltd., the state-owned parent of Air India, plans to seek about $840 million in compensation from Boeing Co. for delays in the delivery of its 787 Dreamliner jets, the airline operator said.

The company has formed a special team to conduct the compensation negotiations, National Aviation said today in a written response to questions. The carrier said its 27 Dreamliners on order were supposed to start arriving in September 2008. In January 2009, National Aviation sought $710 million as a compensatory late fee and is now increasing the amount, it said.

Compensation for the delay would help India's cash-strapped national carrier, which said July 25 that it plans to sell new bonds to raise money. The airline operator hasn't posted a profit since its formation in 2007. National Aviation, based in Mumbai, will also receive a 12 billion rupee ($257 million) equity infusion from the government throughout the fiscal year ending March 2011, as it seeks to break even in five years.

The debut of the plane, the first composite-plastic airliner, has been delayed more than two years as Chicago-based Boeing struggles with new materials, parts shortages, redesign work and a heavy reliance on suppliers worldwide to build complete sections that are snapped together in Boeing's Everett, Washington, factory. The company said last month the Dreamliner's entry into service may slide into 2011, rather than the most recent target of the end of this year.

Dinesh Keskar, president of Boeing's India unit, said on Aug. 5 that Dreamliner deliveries to Air India are expected to start in the second quarter of 2011.

Air India asked Boeing to pay about $1 billion for the delays in delivering the planes, the Hindustan Times reported today, without publishing the source of the information. Swati Rangachari, director of India communications at Boeing's local unit, declined to comment on the newspaper report earlier today.

Air India aims to fly an annual 25 million travelers domestically and 15 million on overseas routes to break even in fiscal year 2015, Arvind Jadhav, chairman and managing director, said on July 25.