Air India wants to cancel 777 order, Boeing offers single-aisle planes

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 companies have been continuing for quite some time over the issue, but no final decision has been reached yet, a source in the airline said here.

"Air India wants to cancel the delivery of three Boeing 777-300 Extended Range aircraft," the source said. "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." The source said hard negotiations are going on as a host of issues are involved.

"Differences over pricing remain 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."

In 2005, Air India had placed orders for 68 aircraft — 18 B737-800 planes, 27 Dreamliners (B787-800) and another 23 B777 aircraft.

Of the 23 Boeing 777s, 15 are B777-300 ER planes and eight Boeing 777-200-LR aircraft.

Air India has already taken delivery of 18 B737-800s and eight B777-200 LRs. Of the 15 B777-300 ER aircraft, it has received 10 planes while five more are to be delivered over the 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 source said.

Any aircraft purchase has to be cleared by the price negotiation committee and Air India would have to go back to it if the airline wants to take up Boeing's offer of replacing the delivery of one type of aircraft with another, the source said.

The overall aircraft deals with Boeing and Airbus were also cleared by the public investment board of the Union finance ministry.

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

Air India, too, had planned to cancel orders for three B777 aircraft, besides returning most of its leased planes to tide over the cash crunch.

It is estimated that Air India will have to make payments of Rs22,000 crore for aircraft deliveries this year as against Rs12,000 crore last year.