Airlines line up for Boeing 787 delay compensation

Airlines lined up yesterday for compensation after Boeing Co announced a further six-month delay for its new 787 Dreamliner plane.

Air New Zealand, Air India and Japan's two big carriers were among those eyeing redress along with Virgin.

The US plane maker announced the third major delay for the revolutionary plane on Wednesday, promising first delivery in the third quarter of 2009, more than a year after the original target of May this year - with an indefinite delay for a short-range model favored by the Japanese carriers.

Air New Zealand and Air India said they would seek compensation. All Nippon Airways (ANA), due to get the first 787 off the assembly line, and Japan Airlines said they planned claims after assessing the impact.

Virgin said yesterday it was in compensation talks with Boeing over an order for 15 of the planes.

Australia's Qantas, the plane's second-biggest buyer ordering 65 planes, said it had already put in a claim for redress after previous delays and was due substantial damages.

More than 50 airlines are waiting for 892 Boeing 787s, worth a combined $145 billion at list prices.

Bahrain's Gulf Air, which has ordered 16 of the 787s, said it was unaffected by the delay as it is not due to take delivery until 2016.

"There is a clause in the contract that says we could receive compensation if there are delays, but it's too early to talk about that," said Adnan Malek, acting head of communications.

Other Middle East buyers of the 787 include Qatar Airways, Kuwait Aviation Lease and Finance Co and state-owned Dubai Aerospace Enterprise.

Updesh Kapur, a spokesman at Qatar Airways - which has 30 firm orders and 30 options for the 787 - could not immediately comment.

Northwest Airlines Corp said it would fly older planes for longer, while waiting for Boeing to address problems with the carbon-composite Dreamliner, which the Chicago-based firm had touted as a breakthrough that would change aviation.

Despite the problems, Boeing shares jumped 4.8 percent on Wednesday and shares in most of its US parts suppliers for the airliner also rose, with the delay much shorter than Wall Street had expected.

Japan Airlines and ANA, the two customers for a shorter-range 787-3 variant of the Dreamliner, will be among those waiting longest for their orders to be filled.

Boeing indefinitely delayed deliveries of the 787-3 model, saying it would focus on the standard 787-8 and then a larger, stretched 787-9 variant.

JAL and ANA would have to overhaul plans based on the more efficient planes, said Fitch Ratings analysts Satoru Aoyama.

"They will have to rethink their entire strategy of coping with fuel costs in this day and age, when oil is costing $110 per barrel," he said.

ANA spokesman Shinichi Shinkawa said the company would decide the size of compensation to seek once the overall impact from the delay on its business became clear. Its shares fell 1.9 percent.

Shares in JAL, which has 35 of the planes on order, fell 2.3 percent, as a spokesman said it too planned compensation talks.

Agencies

(China Daily 04/11/2008 page17)