Suit Hits Boeing, Rolls-Royce, CFM

Boeing Co., Rolls-Royce and CFM International are being sued for $2.5 billion by a Southland upstart that claims the aerospace companies interfered with its plan to refurbish and sell 700 Boeing 727-200 aircraft.

Aviation Upgrade Technologies Inc. claims in its antitrust lawsuit that Seattle-based Boeing persuaded CFM and Rolls-Royce not to sell it aircraft engines. Aviation Upgrade’s Finnish-born chairman, Torbjorn “Mini” Lundqvist, claims Boeing was motivated to kill the plan by the prospect of lost sales of its new jetliners.

“The program would have represented a potential loss of more than $35 billion to Boeing if the 727-200 Advanced aircraft were resold to prospective purchasers of new Boeing aircraft,” Lundqvist said in a statement.

Boeing is the world’s largest aerospace company. London-based Rolls-Royce is the world’s second-largest aircraft-engine maker. CFM is a Cincinnati-based joint venture of General Electric Aircraft Engines and Snecma, a French company.

Boeing’s 727-200 Advanced model aircraft was introduced in 1971.

The lawsuit claims that Manhattan Beach-based Aviation Upgrade developed a plan to refurbish the aircraft in 1998 and 1999 to accommodate the exploding demand for mid-sized commercial aircraft.

The work would have included engineering the three-engine planes to fly on two new, more powerful engines and upgrading the cockpit with systems that would allow two pilots--rather than three--to operate the jet.

Aviation Upgrade Technologies had been offered contracts to purchase engines from CFM and Rolls-Royce, which later claimed they couldn’t proceed without Boeing’s approval, the suit claims.

“We don’t know a lot about the situation at this point,” said Boeing spokesman Peter Conte, who added that the company had not been served with the suit. “It would be inappropriate to comment further until we have a full opportunity to examine the court filing.”

The suit was filed last week in federal court in Los Angeles.

Boeing has delivered more than 1,800 727s, and almost 1,500 were still in service as of December 1998, according to the company. Although the 727 was once the best-selling commercial jetliner ever, it has been surpassed by Boeing’s 737, which is less expensive to fly because only two pilots are required in the cockpit.

Shares of Boeing closed up 75 cents at $43.75 on the New York Stock Exchange.