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LOT Polish, Boeing Reach Agreement on Dreamliner Compensation

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LOT Polish, Boeing Reach Agreement on Dreamliner Compensation

LOT Polish, Boeing Reach Agreement on Dreamliner Compensation
December 11
11:31 2013

MIAMI — LOT Polish has reached a deal with Boeing on compensation for its 787 Dreamliner problems.

The Polish flag carrier had been seeking over $33 million for months, according to a report by Bloomberg. Specifics, such as the total value of the deal, were not being provided. Poland, which owns a majority stake in the carrier, is reportedly satisfied with the agreement. The deal could be comprised of straight-up cash, revised lease rates, or a combination of both or more.

The deal avoids what could have been an embarrassing appearance in court over the airplane. Had a settlement not been reached LOT was set to sue the Chicago-based aerospace manufacturer for its losses. LOT went public with their complaints earlier this year when talks with Boeing appeared to not be headed in a direction the airline was happy with.

LOT has faced a number of problems with their Dreamliners since taking their first delivery in November of 2012. The worst of it came right out of the gate, when the 787 was grounded following a few battery-fire/smoke incidents. The grounding lined up perfectly with LOT’s inaugural Dreamliner service, stranding one airplane in Chicago and the other in Warsaw. The planes remained on the ground, unused, until the grounding was lifted in late April.

For LOT the grounding was particularly damaging. The carrier, already on the financial rocks and in the midst of restructuring, staked the lot on the 787 for its long-haul operations. Without the airplanes in service, and having already retired the bulk of their Boeing 767 fleet, the carrier wound up crippled and hemorrhaging cash to the tune of $50,000 per day.

The incident has forced LOT to take on government loans consistently ever since. The carrier admitted earlier this year that if Boeing failed to compensate for their losses, 2014’s finances were already looking sketchy.

If that were not enough, LOT has continued to face a series of isolated 787 incidents. Fuel filters were discovered missing in the engines of two aircraft, temporarily grounding both, in late September.  Shortly thereafter another LOT Polish Dreamliner was forced to divert to Iceland after its inflight identification system failed. An airplane was grounded in Chicago last week when it arrived with damage to spoilers, a result of strong winds while en route from Warsaw.

LOT was one of a handful of airlines that wound up seeking compensation from Boeing over the Dreamliner, most stemming from the three month grounding. Air India, Ethiopian Airlines, Norwegian Air Shuttle, and Qatar Airways have all come out seeking compensation – some of which have been settled. Additional operators are likely seeking compensation as well, though such talks typically stay out of the public eye.

Fire, Now Ice


The closure of the LOT Polish issue removes one issue from Boeing’s plate, though the Dreamliner continues to keep it full. In an ironic twist, the airplane has recently faced issues with ice instead of fire. Two weeks ago, Boeing advised airlines that icing on and inside General Electric’s GEnx engines could cause a temporary loss of thrust. The six total incidents, most of which occurred not on the 787 but on the 747-8 instead (which also utilizes GE GEnx engines) occurred in and around thunderstorms which contained ice crystals. JAL responded by pulling the airplane from Tokyo-Delhi and Tokyo-Singapore. Carriers utilizing the Rolls-Royce Trent 1000 engines remain unaffected.

Even still, the airplane has generally had a resurgence of better news in the past month. Royal Brunei became the latest operator, receiving their first 787-8 in October. Air Canada is set to receive their first airplane in a few months, and recently rolled out their planned configuration.

More importantly the 787-9, the newer, younger sibling to the troubled -8, is coming along nicely. All three test aircraft have joined the program and are flying regularly. Boeing reports that the aircraft remains set to enter service in mid-2014, with its first revenue flight in October.

The order book reached a major milestone recently at the Dubai Airshow, passing the 1,000th order. The figure includes orders for the -8, -9, and -10.

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A Global Review of Commercial Flight since 1994: the leading Commercial Aviation publication in North America and 35 nations worldwide. Based in Miami, Florida.

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