Indonesia’s Garuda says to cancel 49 jet Boeing 737 deal after crashes

Jakarta, Indonesia | AFP | Friday 3/22/2019 – Indonesia’s national carrier Garuda has told Boeing it will cancel a multi-billion dollar order for 49 Boeing 737 MAX 8 jets after two fatal crashes involving the plane, in what is thought to be the first formal cancellation for the model.

“We have sent a letter to Boeing requesting that the order be cancelled,” Garuda spokesman Ikhsan Rosan said.

“The reason is that Garuda passengers in Indonesia have lost trust and no longer have the confidence” in the plane, he said, adding that the airline was awaiting a response from Boeing.

The spokesman told AFP that Boeing officials will visit Indonesia next week to discuss Garuda’s plans to call off the order.

Garuda had already received one of the planes, he said, part of a 50 aircraft order worth US$ 4.9 billion at list prices when it was announced in 2014.

Garuda is also talking to Boeing about whether or not to return the plane it has received, the spokesman told AFP.

The carrier had so far paid Boeing about US$ 26 million while the company’s head told Indonesian media outlet Detik that it would consider switching to a new version of the single aisle jet.

“In principle, it’s not that we want to replace Boeing but maybe we will replace (these planes) with another model,” Garuda Indonesia director I. Gusti Ngurah Askhara Danadiputra told Detik.

Shukor Yusof, head of Malaysia based aviation consultancy Endau Analytics, said Garuda’s announcement appeared to mark the first formal plans by a carrier to cancel an order for the 737 MAX 8.

It “will probably not be the last. There is a risk that Garuda’s rival Lion Air, which also has many 737 MAX 8 orders, might make the same decision,” he said.

“That is a risk. This has been made public by the Lion Air CEO.” He stated publicly that he is considering a cancellation.

He added that it was difficult to predict whether more major carriers would follow suit.

“There are many unanswered questions and each airline has specific needs,” Yusof said. “Each airline needs to deliberate how they want to strategise their fleet management.”

This month, Lion Air said it was postponing delivery of four of the jets after an Ethiopian Airlines Boeing 737 MAX 8 went down minutes into a flight to Nairobi, killing all 157 people on board.

Budget carrier Lion – Southeast Asia’s largest airline by fleet size and a major Boeing customer – said the planes had been on order for delivery this year but the company was reevaluating the situation.

Lion Air operates 10 MAX 8 jets, part of a then record US$ 22 billion order from Boeing made in 2011.

The airlines are the only two that use the MAX 8 in Indonesia.

The Ethiopian tragedy came after a Lion Air jet of the same model crashed in Indonesia in October, killing all 189 people on board.

Both planes reportedly experienced erratic steep climbs and descents as well as fluctuating airspeeds before crashing shortly after takeoff.

Investigators have honed in on an automated anti-stalling system introduced on the plane that is designed to point the nose of the plane downward if it is in danger of stalling.

Boeing’s state-of-the-art model will be outfitted with a warning light for malfunctions in the anti-stall system, an industry source told AFP Thursday, standardising a feature previously sold as an optional extra.

The development comes as the US manufacturer struggles to cope with the fallout from the two crashes, which have cast a spotlight on the safety certification process and shaken confidence in a plane that is crucial to its future plans.