A Russian aircraft leasing company filed the first US lawsuit to cancel an order for Boeing 737 Max jets, according to multiple reports.
Avia Capital Services (ACS), which is a subsidiary of the Russian state-owned Rostec, filed the suit in Chicago on Monday, claiming that Boeing was in breach of contract.
The new 737 Max has been grounded worldwide since March, following the second of two fatal crashes in five months. An automated system that Boeing designed for the plane has been faulted for the crashes.
The complaint claims that Boeing failed to disclose information about the airworthiness of the jet to its customers, according to the
Financial Times, in order to sell the aircraft.
Avia ordered 35 of the 737 Max 8 jets before the grounding. It's seeking $115 million in compensatory damages — a refund of the $35 million deposit it placed, with interest, and $75 million in lost profits — and several times that in punitive damages, according to the Financial Times report.
Before the suit, only one airline had cancelled its orders of the plane due to delivery delays and safety concerns. Although Boeing has
not received any new orders for the 737 Max in four months, International Airlines Group (IAG), which owns major airlines including British Airways, Iberia, and Aer Lingus, said in June that it planned to order 200 of the jets, although that order has not yet been finalized.
Boeing cut
production of the plane by 20% to 42 models a month in April due to the grounding. However, the jets produced since March have not been delivered and have been
piling up in storage as Boeing prepares to submit a proposed fix to the FAA. It has previously said it plans to submit the fix in September, and expects the grounding to be lifted by early November.
Boeing still has a backlog of about 4,550 unfulfilled orders, signifying a cautious confidence within the airline industry that once the grounding is lifted, the plane will be reliable. Analysts have
said they expect orders to resume once the plane is flying again, and Boeing said it could ramp up production to 57 planes a month.
Preliminary reports into the two crashes — Lion Air Flight 610 and Ethiopian Airlines Flight 302 — indicate that an automated system erroneously engaged and forced the planes' noses to point down due to a problem with the design of the system's software. Pilots were unable to regain control of the aircraft. The system engaged because it could be activated by a single sensor reading — in both crashes, the sensors are suspected of having failed, sending erroneous data to the flight computer and, without a redundant check in place, triggering the automated system.
The automated system, the Maneuvering Characteristics Augmentation System (MCAS), was designed to compensate for the fact that the 737 Max has larger engines than previous 737 generations. The larger engines could cause the plane's nose to tip upward, leading to a stall — in that situation, MCAS could automatically point the nose downward to negate the effect of the engine size.
Boeing reported a $2.9 billion loss for the second quarter of 2019, partly the result of a $4.9 billion charge taken by the company as it negotiates compensation deals for the groundings and delivery delays with airline customers.
