Global Economics

New 787 Delay Could Whack Brit Airlines


British Airways, Virgin Atlantic, and First Choice may encounter higher costs and slower growth due to Boeing's delivery delays

British airlines face increased costs running into hundreds of millions of pounds, and expansion plans being blown off course, after fresh problems emerged with Boeing's rollout of its new 787 Dreamliner aeroplane.

British Airways, Virgin Atlantic and First Choice Airways have ordered 97 Dreamliners between them, making it a critical component of the UK aviation industry's new fuel-efficient and environmentally friendly fleet.

Airline sources now fear delivery delays of one year or more after the American aerospace giant revealed last week that it has been forced to redesign parts of the plane. It had previously announced a six-month lag.

The news led Virgin Atlantic, one of the biggest European customers for the plane, to open talks with the American aerospace giant. This could lead to Boeing lending 777 aircraft to the carrier to tide it over until the 787s can be delivered, or replacing some of the 787s on order with the older model. This would be in addition to millions in fines for late delivery.

Steve Ridgway, chief executive of Virgin Atlantic, said: "There are provisions around this in the contracts. We are talking to them about what to do to bridge us through until we get the 787. The 777 is the nearest thing to the 787, that's what we're talking about."

He added: "We already know about the six-month delay, but what we don't know is what is going on with these latest delays." Simply waiting for the plane would jeopardise its growth plans.

A Boeing spokesman said: "We don't comment on talks with specific airlines."

Virgin placed a firm order last year for 15 planes -- equal to half its current fleet -- of the 787-9 variation, with an option for another 28. The deal was worth $2.8bn (£1.4bn) in total. First Choice was the first UK airline to order the aircraft, and was originally set to take delivery of the first of 12 later this year. BA has ordered 24, with an option for another 18.

Qantas and ILFC, the biggest buyer of the new plane, have also begun compensation talks with Boeing. Airlines have ordered 857 of the new aircraft -- a total order book worth more than $140bn -- making it the single most successful new aircraft launch in aviation history. With delays mounting, the company is facing late-fines and additional engineering and manufacturing costs running into the billions.

Meanwhile the Civil Aviation Authority has refused to back down over its decision to hike landing charges at Heathrow and Gatwick. Easyjet confirmed it was to call for a judicial review of the decision, with at least two more firms considering joining the action.

Provided by The Independent—from London, for Independent minds worldwide

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