AVIATION UPGRADE TECHNOLOGIES files A $2.5 billion antitrust suit against the Boeing Company
Los Angeles – On June 30,2000, AVIATION UPGRADE TECHNOLOGIES, INC., based in Orange County California filed a $2.5 billion antitrust suit against THE BOEING COMPANY, CFM INTERNATIONAL and ROLLS-ROYCE Plc. BOEING, based in Seattle, is the largest U.S. manufacturer of commercial aircraft accounting for more than 50% of the aircraft now in service world-wide. CFM with headquarters in Cincinnati, is a joint venture between General Electric Aircraft Engines and SNECMA, a French company, and is one of the major manufacturers of jet engines for commercial aircraft. ROLLS-ROYCE, an English entity, is also among the major manufacturers of jet engines for commercial aircraft.
The Complaint, filed in Federal Court in Los Angeles, alleges that, in 1998/1999, AUT developed a well-defined business plan to participate in the exploding demand for mid-sized commercial aircraft by re-engining approximately 700 of the 900 B727-200 Advanced (currently a three engine) aircraft with two modern engines (a change approved by the FAA) which would substantially exceed the thrust of the original three B727 engines. The refurbished aircraft would also be equipped with other new systems and the modern engines would make the aircraft easily satisfy current and any proposed future noise and emission requirement while reducing fuel consumption. Planned avionics change would have eliminated the need for a third cockpit member, thereby significantly reducing the costs of the operating the up-graded aircraft.
AUT planned to sell the aircraft for about $24,000,000 to U.S. cargo/freight carriers, developing countries for both passenger and cargo use and worldwide for business/corporate use. AUT planned to raise at least $84,000,000 to do the engineering work, secure FAA approval and build two aircraft over a two year period. AUT then planned to build and sell an additional 284 aircraft over the next three years producing a profit of more than $1 billion and over the long-term, on the basis of selling 700 aircraft, projected a profit in excess of $2.5 billion.
The Complaint alleges that AUT arranged for $90 million in financing contingent on securing a supply of jet engines.
According to the Complaint, AUT first was actually offered a contract to purchase engines from CFM which agreed to a form of exclusivity and which was preparing formal documentation when it suddenly advised AUT it could not proceed without BOEING approval and support. AUT then turned to and secured a similar offer from ROLLS-ROYCE (for an even more powerful engine). But the process repeated itself. According to the Complaint after agreeing to the basic terms of a contract and advising documentation was under way, ROLLS-ROYCE, admitting a discussion with BOEING, advised AUT it could not proceed without BOEING approval and support. In a last effort to save the project, AUT contacted Boeing Aircraft Services, a Long Beach, California engineering services division of BOEING. BAS agreed to do the project with AUT, but, the Complaint alleges, was overruled by BOEING Seattle.
“BOEING was highly motivated to kill of the AUT program since AUT retrofit program would extend the lifespan of 727’s, and the probable replacement aircraft would come from Boeing to maintain fleet commonality. The program would have represented a potential loss of more than $35 billion to BOEING if the AUT 727-200 Advanced aircraft were resold to prospective purchasers of new BOEING aircraft,” explains Torbjorn “Mini” Lundqvist, the Finnish-born, Californian businessman, who is the chairman and a major shareholder of AUT.
Accordingly, the Complaint alleges that BOEING induced and persuaded both CFM and ROLLS-ROYCE not to participate in the AUT project. AUT also alleges offences under California state law against all of the defendants.
AUT is represented by Blecher & Collins, in Los Angeles, one of the most respected U.S. law offices in antitrust law. U.S. law automatically triples the damage amount in antitrust cases.
Case filed in: UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION. Case £ 00-07157
Distributed by PR Newswire on behalf of AVIATION UPGRADE TECHNOLOGIES