Fuel efficiency costs Boeing $45 million

After dragging its heels initially, state-run Air India has finally coaxed American plane maker Boeing to pay compensation for lower fuel efficiency than promised in B787 Dreamliner aircraft.

The aviation behemoth has agreed to pay $45 million for additional fuel burn to the airline. But industry sources said the compensation would not be given upfront in cash. Instead, credit memo of this amount would be issued to the airline, which would be settled against future payment made by Air India towards aircraft purchase.

The airline has nine wide-body aircraft, six B787s and three B777s, on order which it hopes to get by March 2018. A proposal to order five more wide-body airplanes is under consideration.

While Boeing did not respond to email queries sent by Financial Chronicle sent October 1, an Air India spokesperson refused to speak on the issue citing confidentiality clause.

Sources, however, said, “There was initial disagreement between the two parties over compensation amount but later negotiations were held for about $45 million to which they agreed.”