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Boeing hit with $336m suit over terminated 737 MAX orders

written by Sandy Milne | April 23, 2020

Kuwaiti leasing agency ALAFCO has filed a US$336 million lawsuit against Boeing, claiming breach of contract against the Chicago-based manufacturer.

In the action, filed 22 April in a federal court in Boeing’s home state of Illinois, ALAFCO stated that it cancelled orders in full on 6 March after Boeing failed to deliver 10 aircraft on time. ALAFCO had paid in advance for a further 30 planes, and seeks repayment of the amount in full.

Reuters reported on 23 April that the Kuwaiti company stated that Boeing had failed to provide a revised delivery schedule, and had “resisted its claim that the problems amounted to a non-excusable delay”.

In the case filing documents, seen by the World of Aviation, ALAFCO alleges that the failure to deliver the planes, “and the circumstances in which they have occurred, substantially impair the value of the purchase agreement as a whole”.

“Accordingly, ALAFCO has cancelled its 737 MAX aircraft orders and requested return of all advance payments.”

ALAFCO specialises in sharia-compliant leasing and provides aircraft to Garuda Indonesia, Ethiopian Airlines, Royal Jordanian, and Turkish Airlines. The acquisition of the 737 MAXs was to be a key factor in the planned expansion of the ALAFCO fleet.

The 737 MAX was first grounded in March 2019, after crashes involving two of the aircraft led to the combined deaths of 346 passengers. Shortly after the second of the crashes (Ethiopian Airlines Flight 302), a negligence lawsuit was levelled against Boeing in an Illinois federal court by the families of one of the victims.


News of the ALAFCO lawsuit comes as more bad news for Boeing, which has shed more than two-thirds of its overall stock value since the MAX’s grounding. Boeing shares fell 6.8 per cent on Monday, after China Development Bank Financial Leasing cancelled an order for 29 of the 737 MAX planes. After news of the ALAFCO suit broke on Wednesday, Boeing shares finished down a further $1.36 (closing at $134.97).


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