Boeing’s delay on 787 Dreamliner triggers calls for compensation

Boeing's latest announcement of delaying the delivery of its 787 Dreamliner, the third in recent times, has the aerospace giants major clients up in arms demanding compensation. These include Air India, Air New Zealand, Virgin, All Nippon Airways and Japan Airlines Limited.

Australia's Qantas, the plane's second-biggest buyer with an order for 65 planes, said it had already put in a claim for redress after previous delays and was due substantial damages. Virgin, with 15 on order, and Air New Zealand, with eight Dreamliners due, said they would begin compensation talks with Boeing. A spokesman for state-owned Air India said it would also seek compensation, but had not yet received details from Boeing on how much longer it would have to wait for its 27 Dreamliners.

Boeing's announcement to delay delivery of the revolutionary fuel-saving airplane came on Wednesday (See: Boeing lays out road map for 787 Dreamliner's first flight and commercial delivery), even as major airlines around the world are coping with record prices of aviation turbine fuel. Now, Boeing promises to deliver the first plane in the third quarter of 2009, more than a year after the original target of May 2008. More than 50 airlines are waiting for 892 Boeing 787s, worth a combined $145 billion at list prices.

The two Japanese airlines will be especially hard-hit, considering that they are the two customers for a shorter-range 787-3 variant of the Dreamliner, which Boeing has presently put on the backburner to focus on the standard 787-8 and then a larger, stretched 787-9 variant.

The problems at Boeing are quite similar to the embarrassing and costly delays at archrival Airbus, a unit of European aerospace group EADS, which was two years late with its A380 super jumbo, the largest passenger aircraft in the world. Boeing's original plan was to outsource almost all major manufacturing to outside companies and then assemble the plane itself but found this makes it hard to monitor mistakes and delays.

"The 787 is an extremely fuel-efficient aircraft," said Japan Airlines' chief executive Haruka Nishimatsu, ''a delay will impact us significantly."

"We did anticipate a further delay and have been working on contingencies for some time," Qantas CEO Geoff Dixon said in a statement, adding Qantas was entitled to substantial damages.