Russians, money, Covid19, is it, isn’t it happening and the personal foibles of a Russian oligarch, all play a role in this increasingly bizarre story over an order for four Boeing 748F’s.
Almost out of nowhere a lawsuit was filed this week in Boeing’s home town of Seattle by Russian air cargo specialist Volga-Dnepr Group, the owners of the Air Bridge Cargo (ABC) group and its subsidiaries like Cargologicair UK.
Volga-Dnepr claims that it has a binding contract with Boeing to deliver four of the 748F’s, and that it has the nearly US$600m to pay for them. Indeed they’re saying they are expecting one to be delivered soon.
Only it’s not quite as straight forward as that. When the order was first made, Volga-Dnepr’s owner, Alexey Isaikin, an aircraft enthusiast, suggested in 2016 he wanted dinner with a then very elderly Joe Sutter, the design chief for the original 747. Boeing obliged.
At the time Isaikin declared the 748 “the best cargo plane in the world”.
In March 2020 Boeing removed the four pending aircraft from the delivery schedule, showing just the 13 left for UPS. Volga-Dnepr also has an order for for nine 777-F’s as well.
Now back in January, with the Chinese in lockdown over Covid19 and a collapse in the Asian cargo market, ABC had to ground at least half of its fleet and told Boeing it couldn’t now get financing to finish the order.
By 17th January, the company informed Boeing it couldn’t accept the 747-8F’s and needed “to rescind the purchase agreement.”
A follow up letter was sent to Boeing on January 22nd, declaring it “could not fulfil its contractual obligations”, in respect of the first three 777-F’s.
Having received the letters, and not being especially bothered by the loss of the 748F orders, which Boeing seems to have lost all interest in, mostly because Triumph, who made the exterior key panels was leaving the programme, effectively killing it off, accepted them at their word. Boeing saw the order as dead. Besides it had other customers waiting in the wings.
Now the vagaries of the cargo market swoop back in to save ABC – Covid19 is now a global pandemic and large freighters can’t be had for love nor money.
Those unwilling in a downward market, to supply the finance Volga-Dnepr needed, suddenly changed their mind and the company got the money and wanted the aircraft.
The first aircraft was supposed to have been delivered on February 28th, Boeing by then said it was in advance stages of selling it and the other three to another buyer, and had found a buyer for the three 777-F’s.
On 13th April Volga-Dnepr now wanted the aircraft “as soon as possible”. On May 1st they also said they wanted the 777-F’s.
Volga-Dnepr seems to think that it was unreasonable of Boeing to have spent the 46 days between the 28th February trying to sell the aircraft, when it should have taken delivery of the first aircraft, them cancelling the contract and then unilaterally declaring it was changing its mind on the 13th April, and that the contract was still valid, as a cause for suing Boeing.
They feel that they paid just about $150m in advance fees (almost certainly lost on cancellation), that Boeing profited from their distress during a pandemic, and all they should be charged is 46 days of storage fees!
Meanwhile their respective PR departments are trying to play down the matter. You know partnerships, strategic business allies, all that smoke and mirrors verbiage they spew at times like this.
Yet on the other hand…at least two airlines are adamant they have requested quotes from Boeing for the supply of 748F’s and been totally ignored, and Boeing is about to lay off engineers and machinists – some 5,000 of them, as apart of its wider job cuts likely to total some 12,500.
I suspect the lawsuit is merely a negotiating ploy to get Boeing to speed delivery of the aircraft, while the market for their use is high. And I suspect the Russian banks financing it – which would have had a nod from the Kremlin, have a time limit. If the market dives and the government feels its no need to spend dollars – especially when the oil market is so depressed, then Volga-Dnepr is the least of their worries. But if the airline can get them soon, once it has them, it has them.