After filing the first corporate lawsuit over Boeing’s defective and dangerous 737 MAX aircraft on Monday, Russian conglomerate Rostec announced Tuesday that it was ready for an out-of-court settlement. The lawsuit was filed in Cook County Circuit Court in Chicago on behalf of Rostec unit Avia Capital Service, an aircraft leasing company. It is seeking to cancel its contract with Boeing for the purchase of 35 737 MAX aircraft, as well as monetary compensation including $75 million in “lost profit” and about $115 million in compensatory damages. The company is also looking for “several times the amount” in punitive damages.
The 737 MAX has been grounded since the second of two deadly crashes involving the aircraft occurred in March. The crashes of Lion Air flight 610 and Ethiopian Airlines flight 302 claimed the lives of 346 people and while investigations into the two crashes are ongoing, initial reports link the cause of the crashes to the MCAS, the jet’s malfunctioning flight control system.
“We expect this to be just the first of many lawsuits against Boeing by airlines who have lost revenue as a result of the failed 737 MAX,” said Mike Andrews, a Beasley Allen lawyer who focuses much of his practice on aviation litigation and represents families of victims killed in the Ethiopian Airlines crash. “Other airlines may have additional claims for damage to their business reputation, lost business opportunities and various other claims.”
According to Avia, the jets were ordered for a number of Russian air companies, including domestic low-cost Pobeda, which is also a state carrier for Aeroloft. An Avia company spokesman said that several years ago, Avia made a $35 million cash deposit to Boeing to secure the order. The company expects the deposit to be returned, plus interest and in addition to the monetary compensation it is seeking in the lawsuit.
Avia claims that Boeing not only designed a defective aircraft that wasn’t safe for flight, it misled its customers and the public about the aircraft. It also withheld “critical information” from U.S. regulators during the aircraft’s certification process, Avia claims. Avia also alleged that the two Boeing 737 MAX crashes were due ultimately to Boeing’s “negligent actions and decisions.”
Boeing has been working to develop a “fix” that will get regulators to lift the ban and put the planes back in the sky. However, problems with the aircraft have continued to surface throughout the summer, forcing Boeing to push back plans to return the aircraft to service and forcing airlines to scramble their current fleets to cover the lost seats due to the grounding. The aircraft manufacturing giant has been negotiating compensation deals with airlines and other customers over the last six months.
While it made a big splash in the headlines in July announcing it would donate $100 million to crash victims’ families, Boeing’s focus remains on repairing and maintaining relationships with corporate customers.
Mike is a lawyer in the firm’s Personal Injury and Products Liability section. He has represented people seriously injured in aviation crashes, and the families of those killed in both civilian and military airplane crashes and helicopter crashes. He also has written a book on the subject to assist other aviation lawyers, “Aviation Litigation & Accident Investigation.” The book offers an overview to the practitioner about the complexities of aviation crash investigation and litigation.