AI grounds Dreamliners, may seek compensation for losses

Written by fe Bureau | New Delhi | Updated: Jan 18 2013, 05:55am hrs
Air India has been forced to ground all six Boeing 787 Dreamliner aircraft following an order from the Directorate General of Civil Aviation that was prompted to do so after US aviation regulator Federal Aviation Administration issued a global advisory to stop 787 operations on Thursday.

Airlines across the world are grounding the plane after the 787 operated by All Nippon Airways had to make an emergency landing on Wednesday due to errors in its instruments because of a faulty battery.

All Nippon Airways immediately grounded all its 787s and Japan Airways also followed suit. Qatar Airways has also grounded the 787 fleet.

The FAA has issued an advisory to ground the Dreamliners, said Arun Mishra, director general of civil aviation. We took a decision after that and as of now there is no clarity on when the 787s will be back in service. Boeing has to satisfy everyone with safety standards, he added.

Air India had deployed the 787 on Delhi-Paris and Delhi-Frankfurt routes apart from some domestic destinations. Two flights Delhi-Chennai and Delhi-Bangalore took off early morning before the order from the DGCA was received.

Air Indias international flights have been clubbed and are being operated on Boeing 777. The Boeing 787 was critical to Air Indias turnaround plan due to its 20% less fuel consumption. It has already issued a tender in an attempt to sell part of its Boeing 777 fleet and replace them with the Boeing 787s.

A senior Air India official said they may consider seeking compensation from Boeing if the delay in getting the planes back in the air lasts too long.

They had delayed delivery and now this incident puts our plans off track, said a senior Air India official on condition of anonymity. As of now we will use the 777s for the 787 routes but certainly this throws a spanner in our plans to reduce costs as 777s consume much more fuel.

We will see how other airlines are handling the situation and also take a call soon on whether to ask for a compensation in case the plane is cleared to fly again for a long period of time, the official added.

Civil aviation minister Ajit Singh said that Air India will not fly the Dreamliners till the FAA and DGCA give clearance. How long it will take, we will all know only in a couple of days, he told reporters. There are about 50 Dreamliners in operations for more than a year, therefore, more than 50,000 miles have been flown so let us hope they can find a solution.

Air India has taken a bridge loan of $695 million to buy the six planes. The airline was trying to sale and leaseback the planes to repay the loans. However, experts say the grounding of the planes may expect the valuations while approaching the lessors for sale and leaseback. The planes have a list price of $207 million.

The FAAs advisory came after the incident with the All Nippon Airways flight on Wednesday. The in-flight Japanese battery incident followed an earlier 787 battery incident that occurred on the ground in Boston on January 7, 2013, the FAA stated. The AD (airworthiness directive) is prompted by this second incident involving a lithium-ion battery.

These conditions if not corrected could result in damage to critical systems and structures and the potential for fire in the electrical department, the FAA statement added.

The 787 uses lithium-ion batteries to consume five times more electricity than other conventional jets. The technology helps reduce fuel consumption as using batteries means less power is drawn from the engines to keep the other components of the plane running.

Boeing is committed to supporting the FAA and finding answers as quickly as possible, Boeing chairman, president and CEO Jim McNerney said in a statement. The company is working around the clock with its customers and the various regulatory and investigative authorities.

We are confident the 787 is safe and we stand behind its overall integrity, McNerney added. We regret the impact recent events have had on the operating schedules of our customers and the inconvenience to them and their passengers.

Moodys Investors Service said the 787 grounding was a negative credit development for Boeing, but ratings were not expected to be impacted for now. This could pose new operating and financial pressures for Boeing, including further delay in delivery schedules and future order flow, as well as ongoing reputational risk, noted Russell Solomon, Moodys senior vice-president and lead analyst for the company.