ALAFCO sues Boeing over breach of 737 MAX aircraft contract

Aviation leasing and finance company ALAFCO has filed a lawsuit against Boeing over a breach involving a 737 MAX aircraft contract.

The Kuwaiti company has alleged that Boeing has failed to return payment on undelivered 737 Max 8 jets.

In a complaint filed to the Chicago Federal Court, ALAFCO accused Boeing of breaching the contract by keeping the payments despite being unable to deliver the planes or provide a revised delivery schedule.

The leasing company had ordered up to 40 737 MAX aircraft to be delivered in specified months.

However, Boeing suspended 737 MAX operations last year after the US Federal Aviation Administration grounded the aircraft following the deaths of 346 people in crashes involving two 737 MAX planes operated by Lion Air and Ethiopian Airlines.

On 29 October 2019, ALAFCO terminated the order scheduled for delivery in March 2019 based on Non-Excusable Delay, which expired on 30 September 2019.

The company also demanded the return of all advance payments for the aircraft, along with liquidated damages and other compensation.

Boeing responded in a letter dated on 3 December, which stated that it ‘respectfully disagrees’ with ALAFCO’s claims under the Non-Excusable Delay agreement.

The company further delayed the delivery of seven additional aircraft indefinitely, which are scheduled for delivery between February and October this year.

Last month, Air Canada scaled down an earlier Boeing 737 Max aircraft order.