RJ seeks compensation for 787 delays
State-backed carrier Royal Jordanian is in talks with Boeing to seek compensation for delays in the delivery of the 787 Dreamliner, the CEO of the airline said.
The fuel-efficient 787 is three years behind schedule, a delay that has caused Royal Jordanian “huge” losses at a time of soaring fuel prices, Hussein Dabbas said Monday.
“We are talking to them [about compensation] but the contracts are quite difficult to break,” he said on the sidelines of the 4th Arabian Business Forum in Dubai. The airline has lost “huge amounts,” in revenue as a result of the delay, he said. “Definitely, millions absolutely.”
“The 787 consumes 20% less fuel [than the Airbus 340] so it is a very complicated formula if we are going to start calculating, but it cost us a lot of money.”
Royal Jordanian, which operates a fleet of 32 aircraft, has 11 Dreamliners on order. After a trio of postponements from US-based Boeing, the first craft is due for delivery in the first quarter of 2014 with the remaining planes delayed to 2015, 2016 and 2017.
The Amman-based airline posted a first-quarter loss of $39m, as oil prices skyrocketed on political unrest in parts of the Middle East. Fuel accounts for about 40% of Royal Jordanian’s operating cost, Dabbas said.
The price of oil is “already too high,” he said. “Our budget is based on $85 a barrel and that’s why we incurred a first-quarter loss.”
Crude oil for July delivery traded at $97.15 a barrel on the New York Mercantile Exchange.
Prices are up 39% from a year ago.