Newsdeck

Lion Air Said to Plan Airbus Order Switch After Boeing 737 Crash

By Bloomberg 12 March 2019
Caption
Boeing 737 Max 8 aircrafts at Jakarta's Soekarno-Hatta International Airport on March 12. Photographer: Dimas Ardian/Bloomberg

Indonesia’s Lion Air plans to drop a $22 billion order for Boeing Co. 737 Max jetliners and switch to rival aircraft from Airbus SE as a rift between the companies widens following this week’s crash in Ethiopia, a person with knowledge of the proposal said.

Lion Air was already looking at scrapping the Boeing deal after one of its own Max planes came down on Oct. 29, killing 189 people, and the African tragedy has made co-founder Rusdi Kirana more determined to cancel the contract, according to the person, who asked not to be named as the plans are private.

The move provides the first evidence of Boeing’s order book being hurt following Sunday’s crash, in which 157 people died when an Ethiopian Airlines 737 plunged to the ground six minutes after takeoff. The incident bore similarities to the Lion Air tragedy, and countries including China, Australia and Singapore, as well as Ethiopia and Indonesia, have banned the aircraft.

Lion Air is now evaluating jets from Airbus’s A320 family, the European company’s competitor to the 737 in the single-aisle market, with the focus on the biggest A321neo variant, the person said.

While Lion Air declined to comment on the future of its 200-plane Max order, Daniel Putut, a director at the company, said in Jakarta on Tuesday that it had suspended delivery of four jets due this year. A spokeswoman for Chicago-based Boeing declined to comment.

Relations between Lion Air and Boeing deteriorated last year after the U.S. company pointed to maintenance issues and pilot error as the underlying causes for the loss of flight JT610 in the Java Sea, even though preliminary investigations had found that the 737 came down after a computerized system took control following a sensor malfunction.

Anger over the planemaker’s comments led Kirana to say in December that he planned to cancel Lion Air’s order, the third-biggest for the upgraded model.

Two Short, Erratic Flights End in Tragedy: Could They Be Linked?

The largest Indonesian carrier by domestic market share has already refused to take delivery of a 737 Max jet due this month, said the person. It informed Boeing of the decision in February, they said.

Lion Air spokesman Danang Prihantoro said the company won’t comment further on delivery plans beyond this year and will provide updates on new developments when appropriate.

Losing the deal with Lion Air, which has 10 remaining 737 Max planes in its fleet plus three in Thailand, including the first one to enter commercial service, would come as a blow to Boeing, adding to a headache from the growing crisis around plane groundings.

Shares of the U.S. planemaker fell as much as 13 percent on Monday, the most since the 9/11 terrorist attacks, as investors assessed the damage to future prospects of the company’s best-selling aircraft family.

Since the Lion Air crash, Boeing has emphasized the Max’s safety and defended the anti-stall Maneuvering Characteristics Augmentation System that pushed the Lion Air plane’s nose down a dozen of times before it crashed.

Pressure on the company ramped up further Tuesday as Singapore and Australia moved to block the plane from their airspace, with Singaporean authorities saying they need to gather more information on the “safety risk” associated with the model. DM

Gallery

Watch Pauli van Wyk’s Cat Play The Piano Here!

No, not really. But now that we have your attention, we wanted to tell you a little bit about what happened at SARS.

Tom Moyane and his cronies bequeathed South Africa with a R48-billion tax shortfall, as of February 2018. It's the only thing that grew under Moyane's tenure... the year before, the hole had been R30.7-billion. And to fund those shortfalls, you know who has to cough up? You - the South African taxpayer.

It was the sterling work of a team of investigative journalists, Scorpio’s Pauli van Wyk and Marianne Thamm along with our great friends at amaBhungane, that caused the SARS capturers to be finally flushed out of the system. Moyane, Makwakwa… the lot of them... gone.

But our job is not yet done. We need more readers to become Maverick Insiders, the friends who will help ensure that many more investigations will come. Contributions go directly towards growing our editorial team and ensuring that Daily Maverick and Scorpio have a sustainable future. We can’t rely on advertising and don't want to restrict access to only those who can afford a paywall subscription. Membership is about more than just contributing financially – it is about how we Defend Truth, together.

So, if you feel so inclined, and would like a way to support the cause, please join our community of Maverick Insiders.... you could view it as the opposite of a sin tax. And if you are already Maverick Insider, tell your mother, call a friend, whisper to your loved one, shout at your boss, write to a stranger, announce it on your social network. The battle for the future of South Africa is on, and you can be part of it.


Comments

Please note you must be a Maverick Insider to comment. Sign up here or if you are already an Insider.

South Africa

Businessman recounts sneaky Gupta acquisition of VR Laser

By Jessica Bezuidenhout

Writing the 2019 Election

The Young Guns and reruns of Little House on the Prairie

Ismail Lagardien 5 hours ago

By the time of his death in 1987, Hitler's deputy Rudolph Hess was the sole prisoner in Spandau prison, a facility designed for 600.