Airlines receive a warranty on their 787s, which, while guaranteeing repairs, doesn’t obligate Boeing to compensate for lost business. In a proforma of a standard warranty, attached to a regulatory filing on the sale of a smaller type of plane to Southwest Airlines, Boeing typically guarantees its products are free from defects in material and design. Significantly, these include “selection of materials and the process of manufacture, in view of the state of the art at the time of design.” Battery experts said Boeing’s choice of lithium-ion batteries was current when the 787 was designed.
When dealing with wing cracks on its A380, Boeing’s European rival Airbus initially said it would repair parts under warranty and suggested it would not pay for operational losses. It was widely reported to have later bowed to pay compensation on top of this. Tim Clark, head of the A380’s largest operator, Emirates Airline, declines to discuss compensation directly, but told reporters this month that Airbus “recognize the commercial distress that has put us into.”
While airplane purchase deals tend to be very complex and can involve long-term ties, compromise is common. When Boeing’s 747-8 hit snags, for example, instead of cancelling, Hong Kong’s Cathay Pacific came away with a good deal on brand-new 777s, air industry sources said.
After ANA, which has ordered another 66 Dreamliners, the biggest 787 operator is rival Japan Airlines Co (JAL) with 7 of the jetliners, and another 38 on order. United Continental Holdings Inc’s United Airlines and Air India both have six.
ANA has not said how much the 787’s grounding has cost it to date, though it has said it was losing $868,300 in revenue per plane in the last two weeks of January. ANA has a large cash buffer, having raised $1.8 billion in a share sale last year to fund aircraft purchases and possible acquisitions.
JAL President Yoshiharu Ueki said on Tuesday the 787’s grounding could knock 1.1 billion yen ($11.6 million) off the airline’s operating profit for April-May, taking the total hit since the grounding to 1.8 billion yen. In October-December, the company had an operating profit of 46 billion yen.
Without yet having found what caused the battery incidents in January, Boeing last week unveiled a new battery system and predicted the 787 could be back in the air within weeks - a forecast that ANA chief Osamu Shinobe described as a best-case scenario as it remained unclear how long regulators will take to approve Boeing’s battery fix.