Posturing, negotiations affecting Boeing S.C.’s first delivery

By Matt Tomsic
mtomsic@scbiznews.com
Published July 2, 2012

Negotiations and posturing are affecting the delivery date of the first Lowcountry-built 787 as Air India tries to capitalize from the 787 program’s delays.

Jack Jones, vice president and general manager of Boeing South Carolina, said in April the aerospace giant planned to deliver the first 787 to Air India sometime in June. The Boeing Co. rolled the airplane from its final assembly factory in North Charleston to the flight line on April 27, and since then, Boeing has readied the 787 for delivery.

“That all takes a couple months,” Jones said before the rollout. “Our plan is to have that all complete by the end of June.”

But Boeing has not announced when it will deliver the plane, and Adam Pilarski attributes the delay to Air India. Pilarski is the senior vice president of Avitas, an aviation consulting firm.

“The airline is kind of notorious for being mismanaged for decades,” Pilarski said, adding Air India is government-owned and “heavily influenced” by politics.

The airline is trying to use 787 program’s delay in deliveries as leverage, he said. Boeing’s 787 program is about three years behind.

“I am not privy to the details of the contract and the negotiation, but India or the government of India is trying to get as much out of Boeing as possible,” Pilarski said.

Some of Air India’s demands — like reports of a $1 billion payment from Boeing — are childish, he said.

“And I think that it’s action by government bureaucrats (who) do not realize how the real world works,” Pilarski said.

The Indian government wants cash, while Boeing may be willing to pay them in discounts for future airplanes, Pilarski said, reiterating he is not involved in the discussions.

“And if you’re a bureaucrat, that’s not very appealing,” Pilarski said. “If you’re an airline person, it is appealing.”

Meanwhile, Boeing also has work at stake. If negotiations fall through, the company can’t just fly the 787 back to Fort Worth, Texas, to be re-painted for a different airline. Each order has different criteria from seating to safety regulations that it must meet.

“It’s not a different paint coat,” Pilarski said. “There’s different safety rules in different countries.”

He cited one example: oxygen levels if the plane loses cabin pressure. Pilarski said India’s required oxygen levels differ from the levels required by the Federal Aviation Administration.

Pilarski said Air India’s pilot strike is a separate issue and doesn’t play into the negotiations for the airline’s Lowcountry-built 787.

“At the end of the day, India needs planes; at the end of the day, they will take the 787,” Pilarski said. “Some of it is posturing. If you deal with this particular account, you need good nerves, but I don’t think that it changes a lot.”

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Comments:

Added: 2 Jul 2012

It's time to repaint those bad girls and sell them to someone who wants them!

Joanthan Blubaugh


Added: 3 Jul 2012

when i was growing up in india in 196os there used to be a saying which went like this THH BRITISH GAVE INDIA ITS BEAURACRACY BUT IT WAS THE INDIANS WHO PERFECTED IT. when this India order was initiated i was fearing this attitude from inda.

mir ali


Added: 4 Jul 2012

Nonsense Mr. Pilarski. Modifications would not begin until Boeing had another customer for each airplane, and the time needed to finalize a new customer contract, plus the time required for the customer to take delivery, is far in excess of the few months needed to modify an airframe. Boeing has played this issue very smartly (apart from the disastrous LEAN and Six Sigma-driven design and testing process that caused the three year delay to begin with. That debacle falls squarely at the feet of executive management.) By offering discounts on a per-aircraft delivery schedule, AI and GOI will not benefit from receiving a cash discount in advance of partially canceling their order. From the actions they took regarding pilot training, and by ordering a reexamination of their long range route system, one can surmise this was clearly being considered. Yes, Boeing should pay for some of the delay incurred. However, now that the airplanes are ready, its India's wicket so to speak. If I were Boeing, the offer would now be 'discount, minus storage fee.' Cheers!

Will Humphrey


Added: 4 Jul 2012

If Air India wants cash as a compensation for delays then what's wrong!? Of course if I was an airline owner I wouldn't except discount on future planes over cash. Thats saying Boeing will punish AI by making them buy more Boeing aircrafts if they want their money...WTF! Now I see why businesses aren't doing well in US.

Vinay Roy


Added: 5 Jul 2012

Pilarski - not privy to the details of the contract and the negotiation, not involved in the discussions - then why are you talking? He needs to keep his mouth shut and business journal needs to find who has facts not an opinion.

Who is Pilarski?