By: Sinéad Baker
Aug. 31, 2019, 5:07 AM
An aircraft leasing company suing Boeing thinks the 737 Max planes now have “no value” because of their safety record and fears among passengers fears, a lawyer representing the company told Business Insider.
Steven Marks, a lawyer representing Avia Capital Services, told Business Insider that the company no longer wants to take delivery of its order of 737 Max jets, thanks to flaws uncovered in Boeing and the US Federal Aviation Authority’s’ testing of the plane, and passenger mistrust of the jet.
“The public doesn’t have any trust in it, the client can’t use it. It has no value to them,” he said.
The company is now suing Boeing for hundreds of millions in damages, and wants to cancel its order for 35 Max planes, with a refund. The exact amount Avia is suing for has not been disclosed publicly.
Marks said that Avia is dealing with the same delays in Max plane deliveries that are facing the entire industry, and that the company would no longer welcome the arrival of the planes they ordered.
“Deliveries have been postponed and may never occur. I mean, if they were to occur, it would be unwanted at this point.”
Avia, a Russian company that buys and leases planes to airlines like Aeroflot, is now suing Boeing, claiming the company intentionally misled customers and regulators about the airworthiness of the plane.
The lawsuit, seen by Business Insider, claims that “the death of 346 individuals combined with the continued grounding of the 737 Max with no foreseeable future has completely deteriorated public trust in the 737 Max 8 and has rendered it useless.”
At the time of publication, Boeing had not responded to a request for comment from Business Insider on the lawsuit.
The planes have been grounded around the world since March, when a second deadly crash by one of the planes killed 157 people on an Ethiopian Airlines flight. The first crash, a Lion Air flight in Indonesia in October 2018, killed 189 people.
A June poll found that 41% of Americans would not want to fly on the plane until it was safely back in service for at lest six months.
Some airlines have said they will allow customers who do not wish to fly on a Max plane to switch flights free of charge when the plane returns.
The lawsuit states that “flyers have a good reason to lack confidence” in the plane, saying: “Boeing continues to be unable to fix the extensive defects in the 737 Max aircraft.”
Boeing is currently working on updates to the plane, which will allow it to return to service when approved by regulators. Boeing has repeatedly said that it will be the safest plane ever to fly when it returns.
The company has completed the update meant to address the software issue that arose in both crashes, but new issues discovered with the plane have delayed its return to service.
The lawsuit, filed in Chicago on Monday, is claiming fraudulent inducement, breach of contract, and breach of the duty of good faith and fair dealing against Boeing.
It claims that Boeing “manufactured and designed an aircraft that was not safe for flight.”
Avia’s lawsuit alleges that Boeing misrepresented the plane to the FAA when it was being tested for certification, and that “due to Boeing’s own actions and negligence the 737 Max 8 is defective in design and is unreasonably dangerous” to fly.
Avia is asking for $115 million in damages — made up of $75 million in lost profits and $40 million in expenses from advance payments to Boeing — as well as “several times” that amount in punitive damages. The total amount it is asking for is not publicly known.
Most airlines are sticking with Boeing and the Max, but they want compensation as they suffer its fallout
Large numbers of major airlines have continued to express public confidence in Boeing and the Max planes, but many are seeking compensation from the company as they have been forced to cancel flights, face delays to plane orders, and had to pay to maintain and store the planes during the ground.
Airlines have cancelled hundreds of flight, some have cut routes, and others are cutting staff members over the grounding of the Max, which has stretched on longer than the industry expected. The grounding could now extend into 2020.
Boeing has received no new orders for the Max since the second crash, underscoring worries about its airworthiness.
A lack of interest threatens Boeing’s standing as the top aircraft manufacturer. The result is that it gradually being overtaken in deliveries by Airbus, its European rival, and could lose its title as the world’s largest planemaker as a result.
Saudi Arabian airline Flyadeal canceled an order of up to $6 billion for 50 Max planes in July, while Indonesian airline Garuda said in March that it wanted to cancel its order as customers had “lost confidence to fly” in the plane.