Japan Airlines May Demand Compensation From Boeing

Asia's largest carrier says it may seek financial compensation from Boeing for delivery delays of its new 787 jetliner.

TOKYO (AP) -- Japan Airlines Corp. President and CEO Haruka Nishimatsu reiterated Tuesday that his company may seek financial compensation from Boeing Co. for delivery delays of its new 787 jetliner.
Asia's largest carrier in revenue terms had hoped to start replacing older, bulkier planes with the more fuel-efficient 787 in August. But after Boeing announced the model's third delay earlier this month, JAL says it is awaiting word from the Chicago-based company about when its order will actually arrive.
''Since the delay in the delivery of Boeing 787s is expected to inflict a considerable financial burden on us, we will seek a penalty,'' Nishimatsu was reported as saying by Kyodo news agency.
Japan Airlines, or JAL, spokesman Stephen Pearlman said the president's comments, though worded slightly stronger, did not represent a change in the company's stance.
''Once we actually know the extent of the delay, we can then determine how that's going to affect our current plans and our strategy,'' Pearlman said. ''Depending on the impact that it has, we may consider compensation.''
Boeing initially planned for test flights last year and delivery of the first aircraft to Japan's All Nippon Airways in May. It now says the jets will be ready in the third quarter of 2009, more than a year behind schedule.
The company also revised its timetable for different 787s models. The larger 787-9 will follow the original 787, with delivery scheduled for 2012. The shorter-range 787-3 that was originally slated for 2010 will be pushed back after the 787-9.
JAL, which has ordered 35 jets with an option for 20 more, says the 787 delay could force it to keep flying its older 767s instead of retiring them this year as planned, Nishimatsu said.
With crude oil prices hitting record highs, the prolonged wait is especially tough for airlines like JAL that were depending on the 787s to help cut costs.
''Fuel efficiency is key to us realizing cost savings,'' Pearlman said. ''Fuel is the number one expense for our airline.''
JAL's order includes the 787-3, and it says the even further delay of the smaller 787 poses problems beyond fuel consumption.
The original 787 has a wingspan of about 60 meters -- too wide for gates at Japan's main domestic airports, Pearlman said. This isn't a problem for 787-3s, which have a wingspan of about 52 meters.
Boeing's 787 is touted as the first large commercial jet made mainly of carbon-fiber composites, which are lighter and more durable than aluminum. The company says the mid-size aircraft will be cheaper to maintain and offer greater fuel efficiency than comparable planes being used today.
More than 50 airlines have placed nearly 900 orders for the 787, and the delay could result in billions of dollars in costs and penalties for Boeing.
Analysts expect details of the delay's financial impact when the company releases first-quarter earnings Wednesday.
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