A Kuwaiti leasing firm filed a $336-million charge against Boeing on Wednesday for alleged wrongful refusal to return advance payments for a now-scrapped order of 40 of its problematic 737 MAX aircraft.
ALAFCO Aviation Lease and Finance Co accused Boeing of violation of contract in a complaint filed in a Chicago federal court, for keeping the payments despite being unable to deliver the jets, or give out an updated delivery schedule.
ALAFCO disclosed that it canceled the order March 6 after the plane maker failed to deliver nine planes on the agreed upon schedule. ALAFCO pointed out that Boeing has resisted the Kuwait leasing's claim that the setbacks resulted to a "non-excusable delay" that would justify repayment.
The lawsuit adds to the aircraft manufacturer's already troubled business, which has seen stocks on Wall Street dropping nearly 60 percent this year. Boeing's shares fell 1 percent to settle at $134.97 in New York late Wednesday.
Boeing agreed with China Development Bank Financial Leasing Co. this week to scrap the acquisition of 29 undelivered 737 MAX planes.
The decision came after the 737 MAX worldwide grounding by aviation officials and its delivery suspension by Boeing, while General Electric's aircraft leasing firm GE Capital Aviation Services also cancelled the order of 69 undelivered 737 MAX Boeing planes from GECAS' order list.
The Chicago-headquartered plane maker halted its delivery of the 737 MAX in March last year, when the Federal Aviation Administration grounded the fleet of jets following the deaths of 346 passengers in crashes of two 737 MAX commercial aircraft operated by Ethiopian Airlines and Lion Air.
Boeing is also currently being hammered by the ongoing global health crisis, which has forced the company to reduce output because of depleting global demand, airline client's cash dilemma, and the operational rigors of delivering planes.
ALAFCO acquires big passenger planes and leases these to airline companies. Its major owners include the Gulf Investment Corp, Kuwait Finance House, and Kuwait Airways Corp, according to the company's website. Shares of have shed over two-thirds of their market value since early March last year, just prior to the grounding of the 737 MAX.
Meanwhile, Citigroup market strategist Jonathan Raviv trimmed down Boeing's stock from Buy to Hold this week, but lifted his price aim from $150 to $175.
Data by Tip Ranks indicate that Wall Street analysts kept a Moderate Buy rating on Boeing's stock based on five Buys and 13 Holds. The $179.44 average price goal projects a 33 percent upside potential in Boeing's stocks in the next four quarters.
