| TOKYO, March 20
TOKYO, March 20 All Nippon Airways, the
biggest customer for Boeing Co's 787 Dreamliner, wants
the planemaker to compensate it in cash, rather than discounts
on future purchases, for losses racked up since the aircraft was
grounded worldwide in mid-January, said a person familiar with
All 50 Dreamliners have been idled for two months after
separate incidents with the plane's battery at a U.S. airport
and on a domestic flight in Japan. ANA operates 17 of those
aircraft and has likely been hardest hit by having the plane out
of service. The airline has canceled more than 3,600 flights to
the end of May.
"ANA would prefer to have the cash," said the person, who
asked not to be identified, adding that compensation talks with
Boeing had not yet begun.
"This is not something we have disclosed," said ANA
spokesman Ryosei Nomura. "Nothing has been decided regarding
future talks with Boeing."
Boeing has yet to say if it will compensate carriers for
lost revenue from the 787's grounding. Nor has it indicated how
it would do this or how much it might pay. Persuading customers
to accept discounts on future aircraft purchases would allow
Boeing to spread any reimbursement costs over several years.
Airlines, though, may see cash compensation as a quicker way to
make up for their losses.
Boeing declined to comment on compensation issues. "There's
a singular focus on getting the airplanes returned to service.
Our customers want that and we're working hard to achieve that,"
said spokesman Marc Birtel.
Boeing is reported to have already faced billions of dollars
in fees for three years of delays in getting the 787 into
service because of problems with a global production system.
Airlines receive a warranty on their 787s, which, while
guaranteeing repairs, doesn't obligate Boeing to compensate for
lost business. In a proforma of a standard warranty, attached to
a regulatory filing on the sale of a smaller type of plane to
Southwest Airlines, Boeing typically guarantees its products are
free from defects in material and design. Significantly, these
include "selection of materials and the process of manufacture,
in view of the state of the art at the time of design." Battery
experts said Boeing's choice of lithium-ion batteries was
current when the 787 was designed.
When dealing with wing cracks on its A380, Boeing's European
rival Airbus initially said it would repair parts under
warranty and suggested it would not pay for operational losses.
It was widely reported to have later bowed to pay compensation
on top of this. Tim Clark, head of the A380's largest operator,
Emirates Airline, declines to discuss compensation
directly, but told reporters this month that Airbus "recognize
the commercial distress that has put us into."
While airplane purchase deals tend to be very complex and
can involve long-term ties, compromise is common. When Boeing's
747-8 hit snags, for example, instead of cancelling, Hong Kong's
Cathay Pacific came away with a good deal on brand-new
777s, air industry sources said.
After ANA, which has ordered another 66 Dreamliners, the
biggest 787 operator is rival Japan Airlines Co (JAL)
with 7 of the jetliners, and another 38 on order. United
Continental Holdings Inc's United Airlines and Air India
both have six.
ANA has not said how much the 787's grounding has cost it to
date, though it has said it was losing $868,300 in revenue per
plane in the last two weeks of January. ANA has a large cash
buffer, having raised $1.8 billion in a share sale last year to
fund aircraft purchases and possible acquisitions.
JAL President Yoshiharu Ueki said on Tuesday the 787's
grounding could knock 1.1 billion yen ($11.6 million) off the
airline's operating profit for April-May, taking the total hit
since the grounding to 1.8 billion yen. In October-December, the
company had an operating profit of 46 billion yen.
Without yet having found what caused the battery incidents
in January, Boeing last week unveiled a new battery system and
predicted the 787 could be back in the air within weeks
- a forecast that ANA chief Osamu Shinobe
described as a best-case scenario as it remained unclear how
long regulators will take to approve Boeing's battery fix.
ANA estimates it may take a month to fit the new battery
systems to its 787 fleet - even after Boeing completes
certification testing, gains swift regulatory and airworthiness
approvals and ships all the parts and equipment to planes parked
around the world.