Boeing Co. (NYSE: BA) will pay Air India Ltd. $500 million for delays in delivering 27 of its 787 Dreamliner aircraft, a senior Indian official said Wednesday.

The U.S. planemaker agreed to pay the state-run airline two weeks ago, Prashant Sukul, a joint secretary at the Civil Aviation Ministry, said at an air show in India, Bloomberg News reported. The airline had initially requested $840 million and it is seeking additional compensation due to further delays.

The payment will be a combination of discounts in services and cash, the Hindustan Times reported.

Air India said it expects to receive its first 787 in May. The carrier was to have taken initial delivery last year, but it is still working with Boeing on certification, pilot training and introduction plans. Air India order as many as 50 of the long-range jets valued at about $6 billion from Boeing in 2005, news reports said.

By the end of February, Boeing had delivered five 787s out of 870 planes on order, all to Tokyo-based All Nippon Airways. The total value of all orders is over $178 billion.

Boeing shares rose 73 cents to $75.04 in morning trading.