Airline wants to scrap its order for Max 8 planes
JAKARTA, Indonesia — This country’s national airline has told Boeing that it wants to cancel an order of 737 Max 8 jets, the carrier’s spokesman said Friday, adding that its passengers had lost confidence in the model after two deadly crashes in five months.
Garuda Indonesia said it sent a letter to Boeing on March 14 seeking to cancel its order of 49 planes, of which just one had been delivered so far. The deal is estimated to be worth $4.9 billion.
But Garuda’s spokesman acknowledged that it was difficult to cancel such agreements once they had been signed and that talks with Boeing would continue. “Continuing the Max order does not benefit Garuda,” Ikhsan Rosan said. “Our passengers, psychologically, they don’t trust flying with Max anymore. They often asked during booking what type of aircraft they would be flying on.”
He said Garuda officials would meet with Boeing executives in this capital city Thursday to discuss alternatives.
Garuda’s move is the first publicly confirmed attempt to cancel a Max 8 deal since the planes were grounded worldwide this month after the crash of Ethiopian Airlines Flight 302, in which all 157 people aboard were killed.
A Boeing spokesman declined to comment. More than 4,000 737 Max planes, Boeing’s best-selling aircraft, are on order by airlines around the world. Boeing’s stock, which has dropped 12 percent since the crash, was more than 2 percent lower in Friday trading.
That accident, in which the plane’s course became erratic almost immediately after takeoff, was similar to the crash of Lion Air Flight 610, which also used a Max 8. That plane plunged into the sea off the Indonesian coast Oct. 29, killing all 189 people aboard.
Investigators examining both crashes are looking into, among other things, whether Boeing’s changes to the Max 8’s flight control system might have played a role.
Few analysts expect other airlines to follow Garuda’s lead in canceling orders with Boeing.
“Changing orders midstream is a very costly affair,” said Howard Wheeldon, an aerospace analyst who runs his own consulting business in Britain.
“There’s a huge cost involved in training, support” and maintenance, Wheeldon said. “You’ve got to think long and hard before you change your aircraft and your engine supplier.”
Garuda could find it hard to get out of its Max 8 order. Airlines typically put down a deposit of up to 20 percent of the price of the plane, which costs $120 million before discounts, modifications and other adjustments. To get out of a commitment, an airline has to show that the plane suffers from a structural problem or some other debilitating flaw, industry experts say.