Boeing responded to a lawsuit by Russian air cargo carrier Volga-Dnepr by accusing it of using the COVID-19 pandemic to avoid the consequences of longstanding financial problems.

The legal dispute — over an order for a 747 jumbo freighter and three large 777 freighters — reveals a deep rift between the planemaker and a key customer for large widebody freighter jets. Yet it’s unlikely to threaten Boeing’s longtime dominance of the air cargo market.

While Boeing is letting its 747 jumbo jet program crawl slowly toward a close in less than three years, the cargo version of its 777 will remain the main alternative for large freighter operators until Boeing eventually develops a 777X freighter.

Boeing had little trouble reselling the three 777s built for Volga, and if the Russians walk away from the remaining 747s they have on order, UPS may well pick them up. The four jets are worth more than $600 million at standard pricing.

Volga filed suit last week in federal court in Seattle, claiming that although earlier this year — in part due to the COVID-19 pandemic — it was temporarily unable to pay for its order for the four widebody aircraft, it later came back to Boeing with the money, only to be told it couldn’t have them because Boeing was reselling them.

Volga alleges Boeing is keeping more than $146 million it provided in advance payments while taking money from the new buyers too, and seeks an injunction to stop Boeing from selling the airplanes elsewhere.


In response, Boeing asserts that Volga “literally walked away from two purchase agreements with Boeing back in January and February of this year ― one for 747-8Fs and the other for 777Fs.”

Boeing said that after Volga on Jan. 17 sent a letter stating it couldn’t secure financing for the 747-8 freighter and was “compelled to rescind the entire purchase agreement,” Boeing remarketed the aircraft and in April finalized an agreement to resell it.

And with respect to the three 777 freighters, Boeing said that at a meeting in London on Feb. 11, Volga representative Tatiana Arslanova told Boeing and a leasing company they should “re-market and resell the 777Fs because Volga would not be taking delivery.”

Then, “she and her team walked out of the conference room,” Boeing’s filing states.

Boeing asserts Volga is using the pandemic as cover for its financial failings, claiming that from 2016 on the Russian company had “repeated problems obtaining financing that prevented it from adhering to the contractual delivery schedules for airplanes under contract.”

Now Volga is “seeking an emergency remedy, only after a dramatic change in the market created an unforeseen economic opportunity,” Boeing says.

The conflict may have irrevocably poisoned relations between Boeing and a customer that in 2016 was seen as the savior of the fading 747 program.


However, Boeing no longer seems to need Volga for that purpose.

There are just 17 remaining orders for the 747, all freighters, of which four are for Volga and the rest for UPS. The four for Volga have already been removed from the official backlog.

Frederic Horst, managing director of Luxembourg-based Cargo Facts Consulting, which also has offices in Seattle and New York, said Boeing stopped actively marketing the 747 in the past few years.

Triumph Group, the sole supplier of the 747’s fuselage panels, has committed to providing panels only for the remaining backlog, and in a teleconference with Wall Street analysts last week said it will close the two plants producing those parts by the end of the year.

The 747 is uniquely attractive to big cargo companies because it was designed with an upper deck “hump” so that the entire nose of the airplane can swing upward to leave a gaping opening through which unusually large items can be loaded.


Horst said a group of cargo operators approached Boeing within the last couple of years to discuss a potential large order that could keep the 747 line going.

But Boeing was too preoccupied with the 737 MAX and the 777X and “fobbed them off,” he said.

Since then, Boeing has slowed the production rate for the 747 — the most iconic of all Boeing jets — to a crawl: just one airplane every two months.

“They are letting the program die,” said Horst. “It’s just going to wither away.”

Horst said UPS likes the economics of the 747 freighter and will likely be happy to take the extra four ordered by Volga, no doubt at a discount.

Volga also has a total of nine 777 freighters on order, including the three in the court battle. Horst said Boeing need hardly worry, having quickly found a new buyer for the jets Volga had ordered.


“The 777 is pretty safe as a freighter program,” he said, because it has a large customer base and no immediate competition from Airbus.

Air Cargo News, a rival air freight trade publication to Cargo Facts, last week suggested Airbus might finally step up to compete against Boeing in this market if it launches a freighter version of its A350.

“Boeing should be in no doubt that Airbus is ready to pounce should it spy the chance to finally turn the tables in the cargo business,” the story concluded.

Horst is skeptical. He notes that Airbus’ only successful freighter jet to date was the A300, the last of which was delivered to FedEx 13 years ago.

And he believes that although Boeing is preoccupied now with surviving the COVID-19 downturn, it will eventually produce a freighter version of the 777X to maintain its lead position.

“The biggest danger to Boeing in the freighter area is its own inaction rather than any action by Airbus,” Horst said.


Though the world’s passenger airlines are in severe crisis from the collapse in air travel due to the COVID-19 pandemic, the last few months have seen a temporary surge in air cargo demand as global supply chains began refilling depleted inventory stocks and planes were used to deliver medical equipment and protective gear.

Airlines have even been converting passenger planes into freighter jets by taking out seats and strapping cargo in the cabin. That only makes economic sense because of low fuel prices, high cargo rates and government relief programs effectively paying the crews.

When cargo demand eventually returns to normal, Boeing and Airbus will each consider their moves for the future freighter fleet.

As the dispute between Volga and Boeing plays out in court, it’s a sideshow to those decisions.