Volga-Dnepr and Boeing in legal spat over order backlog

[caption id="attachment_413961" align="alignright" width="441"] To which carrier will MSN 63784 be delivered? Photo/Boeing[/caption] Volga-Dnepr Group , through its U.K. affiliate, is motioning for a temporary restraining order against Boeing in an attempt to reclaim delivery rights to a 747-8F and three 777Fs Boeing began remarketing earlier this year, after the group signaled earlier this year that it was no longer in a position to take delivery of the aircraft. A weakening airfreight market and the early onset of the COVID-19 crisis in China prompted Volga-Dnepr to declare force majeure on the deal in January. When the group then tried to rescind the request May 1, Boeing responded that it had already found new customers for the aircraft. The aircraft were part of an agreement announced at the 2018 Farnborough Airshow for five 747-8Fs and an MoU for up to twenty-nine 777Fs. In December 2018, Boeing’s order books were updated to reflect firm orders for five 747-8Fs and a purchase agreement for nine 777Fs. One 747-8F (63787) has since been delivered to the group’s affiliate carrier AirBridgeCargo (ABC), and Boeing completed assembly of the second 747-8F (63784) that was part of the deal earlier this year. However, according to documents filed with the U.S. District Court for the Western District of Washington, Volga-Dnepr told Boeing in January that it was unable to secure financing and rescinded the 747 purchase agreement. A similar rescission was made for three 777Fs scheduled for delivery in 2020. Through a series of letters and in-person meetings, Volga-Dnepr repeated its inability to carry out its obligations under both purchase agreements and told Boeing to work with DAE to find new buyers for the 777Fs. Not having replied to three letters from Boeing about the delivery of the 747, Volga-Dnepr wrote to Boeing on April 13, seeking to revoke rescission of the 747 agreement. Volga-Dnepr also sent another letter May 1 to ask about the delivery of the 777Fs. Boeing signed a new 747 purchase contract with an undisclosed customer May 4, subject to board approval. A new purchase agreement for two 777Fs was also sent to a new customer on April 2, and was accepted. As part of its defense, Boeing claims that if Volga-Dnepr’s motion were to be granted, it would result in the aircraft being parked until the litigation is resolved, “which could take months, if not years.” In the proposal Boeing sent to a new customer for two 777Fs, it offers a number of credit memoranda. One of these items is a multimodel aircraft memorandum, which recognizes the customer as an existing 777 and 787 customer, but is conditional on the execution of “definitive agreements to purchase (i) Model 777-9 aircraft and (ii) additional Model 787 aircraft no later than June 30, 2020.” There are several potential candidates that fit this bill: Japan-based ANA, which added its first two 777Fs in 2019, is a large 777 and 787 operator, and has twenty 777-9s on order. The carrier wants to climb up the air cargo rankings and would need to add more freighters to do so. Taiwan-based EVA Air currently operates a freighter fleet of five 777Fs that is a shadow of its former 747F fleet. Air China, China Eastern Airlines and China Southern Airlines could likely qualify for the credits. China Southern took delivery of two 777Fs in May, though none of the carriers have signaled an immediate interest in additional freighters. There are some other options that sources suggest are more of a stretch. Korean Air, which already has seven 747-8Fs and twelve 777Fs, also operates 787-9s and ordered 787-10s in 2019, but the group’s financial health is in question. U.A.E.-based Emirates has been reducing the size of its 777F fleet but the remaining eleven 777Fs in its fleet are leased from DAE Capital. The carrier is now operating a substantial passenger-freighter fleet given the current deficit of bellyhold capacity. Qatar Airways is also keen on expanding its already significant freighter fleet, but this is unlikely if an arrangement such as a sale-leaseback deal with DAE Capital is involved, due to the cutting of diplomatic relations between the U.A.E. and Qatar. As for the 747-8F, we wouldn’t be surprised if the customer turns out to be UPS, Atlas Air, Cargolux or Silk Way West. ABC was previously looking to reduce the size of its 747F fleet, and recently returned two 747-400Fs (36784 and 36785) off lease.

Volga-Dnepr and Boeing in legal spat over order backlog

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KlasJet enters freighter market with leased Bluebird 737-300F

Absent the bellyhold, freighter fleet can’t handle cargo demand

Related Posts

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Follow Us