Alafco Aviation, Kuwait sues Boeing to Recoup $336 Million

By Rahul Vaimal, Associate Editor
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Boeing 737 Max Airplane
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Kuwait based aviation leasing company Alafco Aviation Lease and Finance Co. has moved to court against Boeing Co. for the return of $336 million that it paid in advance for 40 of the still-grounded 737 Max planes.

Alafco Aviation Kuwait accuses the aerospace giant of failing to produce the planes on time and said it dropped the entire order.

The 737 Max was supposed to be Boeing’s replacement for its tried-and-true 737 line of slim-bodied planes. But the plane was grounded worldwide and Boeing halted production after 346 people were killed when two of the planes crashed within five months last year.

According to the lawsuit filed Wednesday in federal court in Chicago, Boeing was supposed to start delivering the Max planes to Alafco in March 2019. But that was the month of the second Max crash, which is when Boeing suspended delivery of the planes.

Alafco Aviation didn’t mention how much it agreed to pay for the planes in the suit. But the list price on 20 737 Max 8S planes the company ordered in 2017 was $2.2 billion at the time.

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,” Alafco said in the lawsuit. “Accordingly, Alafco has canceled its 737 Max aircraft orders and requested the return of all advance payments.”

Chicago-based Boeing has struggled since the Max crashes, which were blamed on faulty flight control software, inadequate flight manuals, and lax regulation. It has been further tested, along with the entire airplane industry, by the coronavirus pandemic, as air travel worldwide plummeted and demand for new planes has sunk.

Boeing is yet to comment on the matter.


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