Bloomberg News

Air India to Add More Boeing 787s This Year After Flights Resume

May 14, 2013

Air India Ltd., the state-run carrier that resumes Boeing Co. (BA:US) 787 commercial flights tomorrow, plans to take delivery of eight more of the fuel-efficient planes by December as it seeks to pare losses.

The airline will use the Dreamliner to add new overseas destinations including Sydney and Melbourne, Civil Aviation Minister Ajit Singh told reporters in New Delhi today. Mumbai-based Air India narrowed losses to 52 billion rupees ($952 million) in the year ended March from a record 75.6 billion rupees a year earlier, Singh said.

The fuel-efficient 787 is key to attracting more passengers and cutting costs at Air India, which hasn’t made an annual profit since 2007. ANA Holdings Inc. (9202), operator of the world’s largest 787 fleet, and Japan Airlines Co. will resume Dreamliner flights on June 1 as authorities approved fixes to battery overheating that grounded the plane’s global fleet.

Ethiopian Airlines Enterprise and Qatar Airways Ltd. have already started 787 flights. United Continental Holdings Inc. plans to begin service on May 20.

The planes were grounded after a Dreamliner operated by ANA made an emergency landing on Jan. 16 after detecting smoke from the battery. Nine days earlier, a battery had caught fire on a JAL 787 in Boston. No one was injured in either incident.

Seek Compensation

The carrier, which has six Dreamliners, will seek at least 2 billion rupees in compensation from Boeing for the losses caused by the grounding, a person familiar with the matter said last month. A ministry panel will initiate talks with Boeing for the compensation, Singh said, without giving details.

Air India in 2005 ordered 68 passenger jets, including Dreamliners, worth about $8.1 billion to expand operations and introduce more fuel-efficient aircraft. The carrier has subsequently struggled with debts from the expansion plan, along with high fuel costs and price wars, which led to the government pledging 300 billion rupees in bailouts through 2020.

The company plans to sell and lease back all of the 27 Dreamliners it has ordered as part of a financial turnaround plan. The jetliner is the world’s first made chiefly from composite materials and the first to use lithium-ion batteries.

Air India will start using the Dreamliner on the New Delhi-Bangalore route from tomorrow. Battery fixes have been completed in two of the carrier’s six 787 aircraft, Singh said.

Jet fuel discounts from state-run refiners and sale of real estate assets will help the carrier further narrow losses this year to 39.9 billion rupees, he said. Air India will resume using the 787s on overseas routes from May 22, Singh said.

To contact the reporter on this story: Karthikeyan Sundaram in New Delhi at kmeenakshisu@bloomberg.net

To contact the editor responsible for this story: Vipin V. Nair at vnair12@bloomberg.net


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