Boeing Sued by Kuwaiti Aviation Over $336 Million 737 MAX Jet Order
Boeing Co (BA) is being sued by Kuwaiti Alafco Aviation Lease and Finance Co., for refusing to return the $336 million it paid for the delivery of 40 of its grounded 737 MAX jets.
Alafco Aviation had canceled the plane order March 6 after the aerospace company allegedly failed to deliver the aircraft on time, according to media reports.
The delivery of the order was expected be received in March 2010, Alafco Aviation said in a lawsuit filed Wednesday in federal court in Chicago.
The failure to deliver the planes, “and the circumstances in which they have occurred, substantially impair the value of the purchase agreement as a whole,” Alafco said in the lawsuit. “Accordingly, Alafco has canceled its 737 Max aircraft orders and requested return of all advance payments.”
The lawsuit is the latest blow to the aerospace company, which has seen shares plunging almost 60% this year. The stock slid 1% to close at $134.97 in U.S. trading on Wednesday.
This week Boeing agreed with China Development Bank (CDB) Financial Leasing Co. to cancel the purchase of 29 undelivered 737 MAX jets. The move came after the grounding of 737 MAX aircraft by aviation authorities worldwide and the suspension of 737 MAX aircraft deliveries by Boeing. While General Electric’s (GE) aircraft leasing company GE Capital Aviation Services (GECAS) scrapped the order of 69 undelivered 737 MAX Boeing aircraft from GECAS’ orderbook.
Four-star analyst Jonathan Raviv at Citigroup this week cut the company’s stock to Hold from Buy but raised his price target to $175 from $150.
TipRanks data shows that Wall Street analysts, have a Moderate Buy consensus rating on Boeing’s stock based on 13 Holds and 5 Buys. The $179.44 average price target foresees 33% upside potential in the shares in the next 12 months. (See Boeing’s stock analysis on TipRanks).
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