Article Posted on : - May 04, 2010

The 777-300 Extended Range aircraft. A Boeing photo

MUMBAI (PTI): US aircraft manufacturer Boeing is understood to have offered Air India 10 single-aisle planes in lieu of three long-haul Boeing 777s, an order which the national carrier wants to cancel.

Negotiations between the two companies have been continuing for quite some time over the issue but no final decision has been reached yet, airline sources said here.

“Air India wants to cancel the delivery of three Boeing 777-300 Extended Range aircraft. But Boeing made an offer saying it was ready to deliver ten 737-800-aircraft in place of these three planes with a staggered delivery schedule,” they said, adding hard negotiations are going on as a host of issues are involved.

“Differences over pricing remains an irritant in striking the deal as Air India wants these aircraft to be supplied at the prices that prevailed when the orders were placed.

“But the Boeing thinks otherwise,” the sources said.

In 2005, Air India had placed orders for 68 aircraft with Boeing which included 18 B 737-800 planes, 27 Dreamliners (B787-800) and another 23 B-777 aircraft.

Of the 23 Boeing 777s, 15 are B 777-300 ER planes and eight Boeing 777-200-LR aircraft.

Air India has already taken delivery of 18 B 737-800s and 8 B 777-200 LRs. Of the 15 B 777-300 ER aircraft, it has received 10 planes while five more are to be delivered to it over a period of next 15 months.

Apart from the price negotiations, there are some regulatory issues involved which have to be thrashed out before concluding the discussions and finalising the deal, the sources said.

Any aircraft purchase has to be cleared by the Price Negotiation Committee and Air India would have to go back to it if it agrees to Boeing's proposal of replacing the delivery of one type of aircraft with another type, they said.

The overall aircraft deals with Boeing and Airbus were also cleared by the Public Investment Board of the Finance Ministry.

Following the downturn in aviation sector the world over, airlines including Air India have been posting huge financial losses, leading the carriers to defer or cancel their aircraft orders from global manufacturers.

Air India too had planned to cancel orders for three B-777 aircraft, besides returning most of its leased planes to tide over the cash-crunch.

It is estimated that Air India will have to make payment of Rs 22,000 crore for aircraft deliveries this year as against Rs 12,000 crore last year.