Volga-Dnepr in dispute with Boeing over freighter deliveries
02 / 06 / 2020
Volga-Dnepr UK is suing the Boeing Company in a dispute over the delivery of four widebody freighters.
The lawsuit, filed in a Washington district court, centres on the delivery of one Boeing 747-8F and three B777Fs that Volga-Dnepr had ordered from the airframer and were due to be delivered this year.
The aircraft never made it into the Volga-Dnepr Group’s fleet, but the two companies are in dispute over the status of the contracts and whether they had been fully cancelled.
Volga-Dnepr is hoping to stop Boeing from finalising the sale of the aircraft to other parties and is also seeking damages for alleged lost earnings and advanced payments.
The case centres on whether Volga-Dnepr was within its rights to revoke the cancellation of the B747-8F order and whether or not it ever repudiated its order for three B777Fs.
In its filing, Volga-Dnepr alleges: “This case involves defendant The Boeing Company’s refusal to deliver four large cargo aircraft to plaintiff in violation of contact terms.
“Boeing seeks to sell them to another buyer instead,” it added.
In the filing, the company admitted that it could not obtain commercially viable financing for the balance of the of the B747F as the February delivery date approached because of the “uncertainty Boeing created about the future of B747 production line”, “general economic conditions in the airfreight market” and “disruptions to trade with China at the beginning of the Covid-19 pandemic” that had caused the grounding of 50% of its fleet.
However, the exact context of this statement is not clear given redactions contained in the filing.
Volga-Dnepr issued a statement stating: “[Volga-Dnepr] firmly believes in Boeing’s leadership in the development and production of the best cargo aircraft and count on Boeing to be interested in retaining us as a customer and a long-term strategic partner.
“Despite market situation in 2019 when freight rates and volumes decreased worldwide as well as further crucial market disruption in the beginning of 2020, [Volga-Dnepr] continued efforts to ensure opportunities for the new aircraft deliveries.
“In particular, [Volga-Dnepr] proceeded with search of financing, being also forced to cut back its debt burden and reduce the fleet by three [B747-400F] aircraft.
“Once those measures were successfully implemented, [Volga-Dnepr] has given priority to new deliveries within its partnership with Boeing.”
In Boeing’s response filing, it alleged that Volga-Dnepr had repudiated the purchase arrangements for the B777Fs.
Boeing alleged: “Volga Dnepr UK literally walked away from two purchase agreements with Boeing back in January and February of this year―one for 747-8Fs and the other for 777Fs.”
Boeing claimed in the filing that later in April it received a letter from Volga-Dnepr revoking the cancellation of the B747-8F deal – but it said the company had by then breached its contract on several grounds and added that it was in the process of selling the aircraft.
Then in May it said it received a letter from Volga-Dnepr to discuss the delivery of the B777Fs. Boeing alleged that by that stage the orders had already been repudiated and added that it was also in the process of selling two of these aircraft.
The two parties also disagree over whether certain payments were made.
In a statement, Boeing told Air Cargo News: “We are not going to comment on pending litigation. Volga-Dnepr is a valued customer with 27 Boeing airplanes in their fleet.
“We work very closely with all of our customers to fully understand their requirements and develop flexible solutions to support them.”
Both companies also accuse the other of trying to take advantage of the covid-19 pandemic.
Adding an extra twist to the case is the importance of Volga-Dnepr to Boeing’s freighter programme.
Boeing’s slowing B747-8F programme currently has 17 unfulfilled orders, four of which belong to Volga-Dnepr UK and 13 are for UPS.
Air Cargo News sister title Flight Global last week reported that Boeing executives are at odds over whether to continue B747 production.
Meanwhile, there are 47 unfulfilled orders for B777Fs, nine of which belong to Volga-Dnepr UK.