Indonesian airline moves to cancel order for Boeing 737s
JAKARTA, Indonesia — In a blow for Boeing, Indonesia’s flag carrier is seeking the cancellation of a multibillion dollar order for 49 of the manufacturer’s 737Max 8 jets, citing a loss of confidence after two crashes within five months.
It is the first announcementof a cancellation since Boeing’s new model aircraft were grounded following fatal crashes in Indonesia and Ethiopia.
PT Garuda Indonesia, which had ordered 50Max 8 jets in 2014 and had received just one plane last year, sent a letter to Boeing last week requesting to cancel the orderworth $4.9 billion, company spokesman Ikhsan Rosan said Friday. The carrier has paid Boeing about $26 million for the order.
Garuda joined other airlines worldwide in grounding its one Max 8 jet after the crash of an Ethiopian Airlines flight this month which killed all 157 people aboard. It came less than five months after 189 people died in the Oct. 29 crash of anotherMax 8, operated by Indonesian private carrier Lion Air.
“Passengers always ask what type of plane they will fly as they have lost trust and confidence in theMax 8 jet,” Rosan told The Associated Press. “This would harm our business.”
He said that Garuda plans to meet with Boeing representatives next week in Jakarta to discuss details of canceling the order.
“We don’t want to use Max jets but maybe will consider switching it with another Boeing model of plane,” Rosan said. He said Indonesian passengers are afraid to take flights using any Max model, whether it’s the 8, 9 or 10 series.
A preliminary report from Indonesia’s National Transportation Safety Committee in December stoppedshort of declaring a probable cause of the Oct. 29 crash.
Officials have provided scant details since then, saying they are still analyzing data.
Meanwhile, in Europe, Polish national carrier PLL LOT said it was considering asking for financial compensation from Boeing or even a delay to deliveries of purchased 737 Max 8 aircraft after the planes were grounded globally following the crash in Ethiopia.
In a statement Friday, LOT said it would wait for communications fromBoeing and flight regulators on whether to put the Max 8 planes back into service. LOT has five 737 Max 8 planes and is to receive ninemore this year. Its total fleet counts over 80 aircraft.
Another Polish carrier, charter airline EnterAir, said Friday it would also seek damages. It has two Max 8s and has placed orders for four more.
Earlier this month, Norwegian Air Shuttles said it would seek compensation from Boeing. It had grounded its 18 Boeing 737 Max 8 aircraft.
With Boeing’s backlog of 4,600 unfilled orders for Max jets, the loss of the Garuda order figures to have little financial impact on the Chicago-based com- pany. The danger is that other airlines could follow, particularly if investigators fault the plane for the accidents in Indonesia and Ethiopia.
“We think other cancellations may followas global customers remain spooked after two crashes with seemingly similar causes,” Jim Corridore, an airline analyst with CFRA Research, said in a note to clients.
Corridore said, however, that if Boeing delivers a software patch to a flightcontrol systemsuspected in the crashes, and the planes are allowed to resume flying, “most customers will be reassured.” He said investors will eventually focus on strong demand for airliners.
Boeing will make standard on its troubled new airliner a safety feature that mighthave helped the crew of a jet that crashed shortly after takeoff last year in Indonesia, killing everyone on board.
The equipment, which had been offered as an option, alerts pilots of faulty information fromkey sensors. It will now be included on every 737Max as part of changes that Boeing is rushing to complete on the jets by early next week, according to two people familiar with the changes.