Air India vs. Boeing re 787 Compensation

[smokejumper]

Air India (probably at the urging of the Indian Government) is seeking a large amount of compensation from Boeing as a result of the delays in 787 deliveries. Reports indicate that the amount sought is up to $1 billion. Boeing has said "No way" to this amount.

Today's Flight Global is reporting that India is considering purchasing an additional 6-8 C-17's in addition to the 10 they've ordered. (see: http://www.flightglobal.com/news/articl ... ng-372562/ )

Now, do I see a possible connection? Suppose Boeing offers Air India a lesser amount for the 787 claims and offers the Indian Air Force a sweet deal on the C-17's. The developmental costs on the C-17 are long paid off, so the remaining costs are the actual production and overhead costs. The Air India delays could be a foil that the Indian Government might exploit to get a better price on the C-17's.

If Air India continues to push too hard against Boeing and keep asking for the $1 billion, is it possible that Boeing could just walk away from the Air India 787 deal, return their deposit, and sell the planes to another airline? Something to think about.

[jumpjet]

That's roughly $40m per plane AI has on order - a discount of around 25% on the full list price [which AI almost certainly didnt pay] in 2006 when AI placed their order.

Giving a 25% discount would set a nasty precedent for negotiations with all the other Boeing customers who are facing delays.

Its probaly all posturing by AI and the Indian govt and if they do walk away from the purchase I am sure the empty delivery slots won't stay empty for long - I am sure some airline CEOs have already made enquriries about the slots.

[Conti764]

That's roughly $40m per plane AI has on order - a discount of around 25% on the full list price [which AI almost certainly didnt pay] in 2006 when AI placed their order.

Giving a 25% discount would set a nasty precedent for negotiations with all the other Boeing customers who are facing delays.

Its probaly all posturing by AI and the Indian govt and if they do walk away from the purchase I am sure the empty delivery slots won't stay empty for long - I am sure some airline CEOs have already made enquriries about the slots.

Something to consider however is how much Boeing gains from possible government contract with the GOI... If I understand well, Boeing Commercial Airplanes is only a (relatively) small part of the Boeing Corporation and negotiating a discount with AI could do them well in the long term.