Russian Leasing Firm To Sue Boeing Over 737 MAX Grounding

Boeing faces legal action from Russian leasing firm Avia. The company claims that Boeing deliberately misled them in order to secure an order for 35 of the aircraft. The claim follows two fatal crashes in the last 12 months, calling into question the aircraft’s safety.

Boeing 737 MAX grounded
Boeing 737 MAX grounded near Boeing field. Photo: SounderBruce via Wikimedia

Order canceled

Avia Capital Services ordered 35 aircraft before the events leading to the Boeing 737 MAX grounding. The order for 35 737 MAX planes will now be canceled.

As reported by AIN Online, this is the first lawsuit in connection with the MAX grounding. Avia is requesting that the $35m deposit paid for the aircraft be returned with interest. Avia is also seeking close to $200m in damages and an undisclosed amount in punitive damages.

The first of many lawsuits

Boeing faces legal action following Avia refusing its compensation offer. Avia has made claims that Boeing knowingly mispresented the safety of the $135m aircraft to convince them to order a fleet.

Boeing is also negotiating multiple compensation deals with other customers. It seems likely that this first lawsuit in connection with the grounding will lead the way for others. Avia’s lawyer, Steven Marks of Podhurst Orseck, an aviation law firm based in Miami, is reported in the Financial Times as saying,

“I think you will see a number of other operators filing suit in coming months.”

Lion Air Boeing 737 MAX 8
Grounded Lion Air Boeing 737 Max 8. Photo: PK-REN from Jakarta, Indonesia via Wikimedia
Mr. Marks also represents 30 families of victims of the Lion Air Crash in October 2018 and the Ethiopian Airlines crash in March of this year. The two fatal crashes caused the loss of 346 lives.

The worldwide Boeing 737 MAX grounding followed, a set of circumstances that has plunged Boeing and its reputation into question. In June, a whistleblower from Boeing approached the European Union Aviation Safety Agency (EASA) with serious accusations of negligence regarding the safety of the 737 MAX.

The investigation into the MAX is ongoing, with test flights slated to take place next month. However, with numerous carriers now removing the MAX from schedules until after the Christmas period, it seems unlikely we’ll see many, or any at all, in our skies this side of the New Year.

An expensive mistake

Immediately after the Ethiopian Airlines tragedy, it was clear that the two incidents shared similarities, indicating a massive flaw in the 737 MAX’s safety. Subsequently, the MCAS has been blamed for the crashes, a fault which Boeing has been working to fix for months. However, since the grounding, other issues have been found with the aircraft, prolonging its grounding and drawing questions over when it will be returned to service.

Boeing 737 MAX grounding 2020
When will we see the MAX back in action? Photo: Boeing

For Boeing, this is turning out to be a very expensive mistake. The planemaker is already reporting huge losses, due to its allocation of a fund towards the compensation costs relating to the grounding. Now, with MAXs clogging up all available storage at Boeing’s facilities, there is talk of even stopping production temporarily until the ban is lifted.

This first lawsuit is a clear marker of things to come, and more bad news for Boeing at a time when the manufacturer could do with some positivity.

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Smokerr

Pure nonsense, trying to get out of contracts is the most likely here.

JackFlash

Why, anyone would want to avoid buying the best aircraft ever build? (sarcasm)

Caroline

It should also sue the FAA on top of Boeing Corporation,i believe.

SHANE

FAA should also get sued as well because they also allowed this to happen. They friended Boeing and allowed Boeing to certify its 737MAX

Shapes

There will come at some critical point in this saga, a moment when all the losses and payouts break the banks of those caught up in in it.