The Indian government is threatening to reject Air India’s Boeing 787s unless the U.S. airframer provides compensation for a four-year delay in deliveries.

“We will not be in a position to take delivery of the aircraft, as the compensation package for the delay in the delivery of the [787s] has not been decided as of now,” Aviation Minister Ajit Singh said May 29.

Singh added that while Air India has “worked out” a compensation package and is “seeking legal opinion on several steps on how to take it forward,” the airline and Boeing had yet to “decide on a compensation mechanism.”

The first 787 is scheduled for delivery in June, and a further seven are planned for the fiscal year starting April 2013.

According to officials, Air India and India’s government expect about $1 billion in compensation from Boeing for the delays in delivering the 787s, which Air India initially expected to receive starting in 2008.

Boeing is not commenting on the situation.

This threat comes as Air India continues to be roiled by a strike action involving more than 300 pilots of the Indian Pilots Guild. The pilots are protesting the carrier’s plans to assign pilots inherited from the 2007 merger with Indian Airlines to the 787 fleet in preference to legacy Air India pilots, who historically crewed Air India’s long-haul fleet.

The strike has cost the airline more than 3 billion rupees ($54 million), according to the Indian government.

The government also has opened an investigation into the carrier’s routes to determine the network’s profitability.