Hyundai Unit Says Boeing Thwarted Its Product Line

From Bloomberg News

Boeing Co., the world's largest aircraft maker, is being sued for more than $750 million by a Hyundai Group subsidiary that says it was prevented from completing work on a new line of commercial aircraft.

Seoul-based Hyundai Space & Aircraft Co. says that Boeing purposely diverted work away from it so a Boeing subsidiary could become the new primary supplier of wings to Boeing's 717-200 commercial aircraft.

The 717-200 is a short-range, 106-seat passenger plane originally developed by McDonnell Douglas Corp., which Boeing acquired in 1997. It's the only commercial jet made by McDonnell Douglas that Boeing has decided to keep making, and its first deliveries are scheduled for September to AirTran Holdings Inc.

"Boeing's course of conduct was intended to force [Hyundai Space & Aircraft] to walk away from its substantial investment so that Boeing's subsidiary [Boeing Toronto Ltd.] could become the primary supplier of 717-200 wings," Hyundai claims in its suit, which was filed in U.S. District Court in San Francisco.

Boeing spokesman Warren Lamb said he was unaware of the lawsuit and declined to comment.

Sales of the $31.5-million jet have come so slowly--just 115 firm orders in four years--that some analysts have called for the program to be scrapped. At last month's Paris Air Show, where Boeing made the 717 its featured product, the company said it was committed to the program.

Shares of Seattle-based Boeing fell 69 cents to close at $43.38 on the New York Stock Exchange.

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