Air India Looks To Save Face and Cash after 787 Delivery Cancellation

AIN AIR TRANSPORT PERSPECTIVE » JUNE 4, 2012
by  NEELAM MATHEWS


Air India holds an order for 27 Boeing 787s, but it could struggle to pay for them now. (Photo: Boeing)

June 4, 2012, 12:43 PM

Individuals can argue over who has lost more face as a result of Air India’s last-minute cancellation of its first Boeing 787 delivery: the U.S. airframer or the cash-strapped flag carrier and its masters in the Indian government. But few would debate the awkwardness of a decision by Indian officials to scrap a delivery ceremony planned for between May 28 and 31 at barely four days’ notice, even as a party of 40 invited media and guests prepared to board a flight to Seattle to join elaborate festivities to mark acceptance of the first of 27 Dreamliners ordered by Air India.

Civil aviation minister Ajit Singh canceled the delivery, insisting that Boeing would first have to agree to a revised compensation package for the program’s well-documented delays. Some see the move as a political smokescreen to hide the fact that Air India can barely afford the aircraft and now seeks a face-saving compromise. The airline has suffered through a wave of pilot strikes and is battling to remain competitive in the face of rising costs and debilitating taxes. But Air India badly needs the cost efficiency promised by the 787 to salvage its long-haul international services.

The Air India board met on May 28 to discuss a compensation demand reportedly valued—but not officially confirmed—at $700 million. But it remains doubtful that Boeing will agree to a compensation figure anywhere close to that amount. In March, Boeing Commercial Aircraft president Jim Albaugh dismissed reports that the airframer had agreed to a $500 million refund. “I think if we settled for $500 million, somebody would have told me,” he said. “We don’t comment on deals that we’ve done, but I can tell you that we’re not writing anybody a check for $500 million.”

According to Kapil Kaul, Indian Subcontinent & Middle East CEO with the Center for Asia Pacific Aviation, the final compensation will prove closer to the $275 million figure Boeing reportedly had originally agreed to pay, along with a bit extra “as a face-saving gesture.” Kaul expressed confidence the delivery schedule given by Boeing will stand with an initial delay of two weeks or so. Boeing declined comment.

Suzanne Rab, a partner at London law firm King & Spalding, indicated that despite Boeing’s reputation for insisting on watertight contracts, with little space for exit, high-level political maneuvering might finally resolve the standoff

Air India’s first 787

Neelam Mathews
April 27, 2012

Air India is the first customer of the first Boeing 787 assembled at the company’s Charleston facility to be rolled out on April 27.

The Charleston second assembly building is spread across 642,720 sq. ft.Boeing Commercial Airplanes President and CEO Jim Albaugh  and Boeing’s South Carolina VP and GM Jack Jones will be present.

Keskar to Head New Boeing Commercial Airplanes in Asia-Pacific

Posted by- Neelam Mathews

Jan 20, 2012

Dinesh Keskar, president, Boeing India, will now take on the new and expansive role of Senior Vice President, Sales Asia-Pacific and India for Boeing Commercial Airplanes. In this role, Keskar will head a sales organization, including contracts, marketing, revenue management and other support functions, says Boeing.

Keskar has been associated with the Indian market for many years and directly responsible for Boeing orders in India.

“This move is part of our forward-deployment strategy to ensure our sales teams are closer to our customers,” said Jim Albaugh, president and CEO of Boeing Commercial Airplanes. “Keskar’s broad previous experience in the Commercial Airplanes Sales arena and his commitment to building deep relationships with customers will serve him well in this assignment.”

Keskar was appointed president of Boeing India in March 2009. Reporting to Shep Hill, President of Boeing International, Keskar currently represents all elements of The Boeing Company in India, where he has led Boeing-wide efforts focused on expanding the company's local presence and pursuing new growth and productivity initiatives. 

“India is an important market and a priority for Boeing, and we will continue to grow and strengthen our partnership with customers we serve and the many communities in which we work and live.  Dinesh will continue in his present role as Boeing India President until a successor is named,” said Shep Hill, president of Boeing International in a statement.

Boeing, the world’s leading aerospace-based company and the largest manufacturer of commercial jetliners and military aircraft combined, has significantly expanded its footprint in India in both the civil aviation and the defense markets. The Boeing India corporate office is located in Delhi, and the company has a Research and Technology center in Bengaluru to collaborate with India’s technical talent for research in aerostructures, materials and network systems. Boeing is also partnering with India’s leading manufacturers to build a supply chain.