February 24, 2012

United Seeking Damages For Delayed 787s

United Continental Holdings for the first time confirms it is seeking damages from Boeing for 787 delivery delays.
The operator has 50 firm orders for the 787, a legacy of the Continental Airlines-United Airlines merger in 2010. The first batch of aircraft are 787-8s from Continental’s order, which originally had expected to add its first 787 in March 2009 before Boeing initiated a series of program delays.

The latest delay hit United in October, when sources confirmed to Aviation Week that Boeing was having issues completing 787s rolling off the production line. That problem forced United to revise its 2012 delivery expectation down from six 787s throughout the year to just five, all to be delivered in the second half of the year.

Now United, in its 2011 10-K report filed late Wednesday with the U.S. Securities and Exchange Commission, reaffirms its 2012 delivery schedule of 19 Boeing 737-900ERs and five 787s. But for the first time the airline also says it is seeking damages for the delays.

“The company is currently in discussions with Boeing over potential compensation related to delays in the 787 aircraft deliveries,” says United. However it adds, “The company is not able to estimate the ultimate success, amount of, nature or timing of any potential recoveries from Boeing over such delays.”

This confirmation follows some highly publicized claims for damages against Boeing for failure to deliver 787s on schedule, with financially troubled Air India reportedly seeking a seven-figure compensation package. Air New Zealand also has confirmed it is in talks with Boeing about compensation, while other airlines are understood to have taken 767s as temporary replacements for their delayed 787s.

Boeing, which does not comment on such negotiations, makes little reference to the issue in its own 10-K from Feb. 9, although it acknowledges that “a number of our customers may have contractual remedies that may be implicated by program delays. We continue to address customer claims and requests for other contractual relief as they arise.”

Aviation Week  

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