Boeing suspends spare parts pact for Air India Dreamliners due to non-payment of dues

Mumbai: Boeing has suspended replacement of faulty parts in Air India’s wide-body 787 Dreamliner planes due to non-payment of dues, three people familiar with the situation said. The development will come as a major blow to Air India, which uses Dreamliners heavily for its Vande Bharat flights.In a letter to the national carrier on August 1, the American plane maker said it is immediately suspending support under the so-called Component Service Agreement. A person in the know said the plane maker has also kept shipments of fresh spare parts on credit hold. The spare parts replacement scheme helps an airline to save up to 30% of maintenance costs, Boeing claims in its website.Avionics equipment maker Collins Aerospace has also conveyed to Air India that its top management has decided to stop supporting the airline on the 787 Dreamliners, and that the airline should present a payment plan within a week, said one of the people cited above. A company spokesperson said it is still supporting Air India on the 787s. Collins Aerospace supplies critical parts such as receiver transmitter and high frequency couplers to airlines. 77383966Air India has 112 planes including 65 narrowbodies for domestic and some regional operations and 47 for overseas operations. It has deployed less than a third of its domestic capacity and is using about 28 wide-bodied planes for the Vande Bharat Mission.More than half of the VBM flights of Air India are operated by 16 Dreamliners. This is excluding its regional international subsidiary Air India Express, which is also operating VBM flights.“The only way out for Air India is to cannibalise, or use spare parts from the grounded 787 planes, which will last the airline two months,” said one of the people cited above.Air India has time till August 15 to pay a part of its dues to Boeing. Thereafter, it has to pay the full dues to get component support for the Dreamliners. If the full dues aren’t cleared in six months, the programme will be terminated.Under the component service programme, Air India owes $33 million to Boeing in dues, finance charges and penalties dating back to 2017. It owes over $65 million to all its aircraft vendors, said a person close to the development.Asenior executive at Air India said discussions are on with Boeing and part payments will be made by August 15. The airline didn’t respond to ET’s emailed queries until press time.“We do not comment on confidential customer discussions, but Boeing always stands ready to support our customers with parts required to operate their aircraft. There are multiple ways through which we support our customers and provide parts. The CSP program is just one way that we offer to support airplanes,” said a Boeing spokesperson without elaborating.Air India posted a record loss of `8,550 crore in FY19. The losses are expected to grow exponentially in FY20 as business is battered by the Covid-19 pandemic. To be sure, some of Air India’s local and many of its global peers are struggling to survive and are suspending operations, grounding planes, laying off staff en mass and in some cases filing for bankruptcy. The staterun Airports Authority of India recently decided to put SpiceJet on cash-and-carry operations, but deferred the decision after discussions.

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