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RJ seeks compensation for 787 delays

Millions lost by three year delay, according to RJ CEO.
The 787 is late, but should be ready for delivery this year.
The 787 is late, but should be ready for delivery this year.

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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.

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