Lion Air Could Cancel $22 Billion Worth Of Boeing 737 Orders 1

Lion Air 737 MAX 8

Indonesian carrier, Lion Air, are thought to be making plans to cancel $22 billion worth of aircraft orders from Boeing. A statement from the plane maker implicated the carrier in the deadly crash, leaving the founder feeling ‘betrayed’ and unwilling to continue with their 737 MAX orders.

Lion air 737 MAX
The Lion Air 737 MAX took a sudden nosedive 13 minutes into the flight

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Update: 17:30 UTC

Boeing have responded to our enquiries on the topic by directing us to a piece in the Jakarta Times, where president director, Edward Sirait, has said there will be no order cancellation.

According to the article, Sirait commented,

“[The delivery schedule] is still in place.”

However, upon pressing he added, “I have met with Pak Rusdi, [but] I must first seek his confirmation about the issue.”

So, although Boeing are apparently interpreting this as good news, it sounds like it’s merely a lack of communication between founder and Director. We will keep readers updated as the story unfolds and more clarity is given to the situation.

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The tragic accident involved a two-month old 737 MAX, which crashed into the Java Sea shortly after leaving Jakarta Airport on October 29th. The accident killed all 189 passengers and crew members on board.

Initial reports have blamed the aircraft’s anti-stall system, after a malfunction caused the nose to dip uncontrollably. Flight recorders show that pilots attempted to correct the problem by pointing the nose higher, but the system pushed it down again. This was shown to have happened more than 20 times during the short flight.

Lion Air flight path
Flight path data shows the abnormal altitude and speed of the tragic flight

Following the accident, Boeing issued a bulletin regarding the Angle of Attack sensor which was thought to be the cause of the issues.

‘Betrayed’

Late on Wednesday, Lion Air founder Rusdi Kirana spoke to press on the phone, saying,

“I feel betrayed. I’m preparing documents to propose cancellations. Everything is still under consideration now.”

Rusdi Kirana
“Betrayed” Rusdi Kirana

It’s a double whammy for Boeing, as Lion Air was the first Asian airline to commit an order for the 737 MAX and was subsequently the launch customer for their 737 MAX 9. At the time, Boeing’s Commercial Airplanes President and CEO, Jim Albaugh said,

“Lion Air was a leader when it was the launch customer for the 737-900ER in 2005 and today it continues to be a leader as the first airline in Asia to commit to the 737 MAX.”

Lion Air 737 MAX orders
Lion Air are the third biggest customer for the 737 MAX

They are currently the third largest purchaser of the next generation 737, just behind Southwest and FlyDubai. They should have been receiving seven aircraft next year, followed by 24 in 2020 and 35 the year after.

The impact on Boeing

The of bad press around the 737 MAX crash is having a negative impact on the US manufacturer. Stock declined by 4.7% since the accident,

Speaking to Simple Flying, a Boeing spokesperson commented:

“We are supporting our valued customer through this very tough time – we wouldn’t comment on any specific customer discussions, but we are engaged and sharing information regularly

Safety is a core value for everyone at Boeing and the safety of our airplanes, our customers’ passengers and their crews is always our top priority. The 737 MAX is a safe airplane designed, built and supported by skilled men and women who approach their work with the utmost integrity.

As our customers and their passengers continue to fly the 737 MAX to hundreds of destinations around the world every day, they have our assurance that the 737 MAX is as safe as any airplane that has ever flown the skies. We are confident in the safety of the 737 MAX.”

Lion Air debris
Preliminary reports have failed to specify a cause

Preliminary crash reports have failed to specify the cause of the accident. Although Boeing have laid the blame at the feet of the carrier, claiming maintenance issues and a poor safety culture contributed to the crash, other bodies are less confident.

India’s Directorate General of Civil Aviation has requested Jet Airways and SpiceJet pilots land immediately if any 737 MAX aircraft show signs of a problem in the ‘Manoeuvring Characteristics Augmentation System’ (MCAS) during a flight.

boeing 737 MAX
The 737 MAX remains one of the most successful Boeing jets

US pilot unions also criticised Boeing for not mentioning the MCAS in training or flight crew manuals.

Kirana has publicly berated Boeing for their comments in relation to the crash. “Ethically, nobody should give their opinion to the preliminary report”, he commented. He went on to say that, as one of their biggest buyers, ‘they should have helped, not give a negative impression’ of Lion Air.

‘No significant issue’ for Garuda

Despite the threats from Lion Air to cancel their order, the nations flag carrier plans to maintain theirs. Garuda Indonesia have indicated they will continue to take deliveries of their 50 737 MAX jets between now and 2030. Speaking to Bloomberg, President Director I Gusti Ngurah Askhara Danadiputra said,

“Our Max jet has been performing well, we have no significant issue with it. We will wait for the final accident report. We will see what was the problem and if there are any repairs or recalls required, we will follow it through.”

garuda indonesia 737 MAX
Garuda have one 737 MAX in their fleet with a further 49 on order

The 737 MAX 8 is the fastest selling aircraft from Boeing with more than 4,800 sales to date. Jeju Air recently ordered 40 aircraft, with the total numbers of orders only surpassed by the longer running 737-800.

The demand has been so high that Boeing have struggled to keep pace with deliveries, hiring in retired engineers in an effort to mitigate delays.

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