Home Business Air India Obtains Its First Boeing 787 Dreamliner (At Last)

Air India Obtains Its First Boeing 787 Dreamliner (At Last)

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After what seemed an interminable delay, Air India, India’s national carrier, received the delivery of its first 787-800 Dreamliner airplane from The Boeing Company (NYSE:BA), according to a report by the WSJ.

The airplane, with two more to be delivered later this month, is an important component of Air India’s return to profitability. The new planes consume 20% less fuel than other aircraft of the same size, and will replace older and less fuel-efficient planes that are a drag on the airline’s operations. The airline plans to deploy these aircraft on new routes to international destinations as they can seat 256 passengers and fly non-stop for 9,400 miles. Initially these destinations will be Australia and Europe. These moves should help the airline recoup lost market share, which has shrunk to 18.2 percent in the face of increased competition, after the Indian skies were opened to competition. The losses led to the government clearing a bailout package of $5.75 billion for the carrier.

“Today is a great day for Air India, as the most technologically advanced and fuel-efficient airplane in the world joins our fleet,” Air India’s chairman and managing director, Rohit Nandan, said in a statement. The airplane has twin aisles and is made of carbon composite material.

Air India Obtains Its First Boeing 787 Dreamliner (At Last)

Boeing’s senior vice president of Asia Pacific and India Sales for Boeing Commercial Airplanes, Dinesh Keskar said the company was pleased to celebrate another historic moment in the nearly seven decade-long relationship with Air India. “I am sure Air India and their customers will be thrilled to experience the revolutionary features on the 787, an airplane that will be the key focus of the airline’s turnaround plan,” he added.

The aircraft is expected to land in New Delhi on Saturday. It was assembled at Everett, Washington, and delivery was effected by The Boeing Company’s (NYSE:BA) South California facility.

The delivery marks the probable settlement of a long-running dispute between the carrier and The Boeing Company (NYSE:BA), about the compensation payable for the delayed delivery of the aircraft, 27 of which were ordered in 2006. The final amount of compensation has been kept confidential, and the government stepped in on August 3 to permit the Air India to take delivery.

Last week, Qantas airline cancelled a large order with Boeing. In a report titled, Opportunity, Masquerading as Anxiety, Oppenheimer Research notes:

The 787 cancellations by Qantas have some investors spooked that more cancellations might follow, and not just for the 787. TGI’s view, with which we concur, is that Qantas is likely a one-off and that the industry’s 6-year backlog provides an unprecedented level of cushion against meaningful attrition.

In related news, RBC Capital Markets notes;  US Airways Group, Inc. (NYSE:LLC) announced August traffic +5% YoY and capacity +5% YoY on load factor of 87%. British Airways plc reported traffic 5% on capacity +8% with likely some Olympic boost, whilst IAG sister company Iberia reported flat traffic and capacity. Ryanair Holdings plc (NASDAQ:RYAAY) (LON:RYA) flew a record 8.9m passengers in August on load factor of 88%. Air Berlin reported passengers down 5% on 85% load factor. Finally, United Continental Holdings Inc (NYSE:UAL) said it would take winter capacity down by 2-3% versus previous guidance of 1-2% due to a deteriorating macro outlook.


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