JAKARTA, Indonesia — Indonesia’s national airline has told Boeing that it wants to cancel an order of 737 Max 8 jets, the carrier’s spokesman said on Friday, the first publicly confirmed attempt to cancel a deal for the planes since they were grounded around the world this month after two deadly crashes. The airline, Garuda Indonesia, said that its passengers had lost confidence in the model after the crashes. It said that it sent a letter to Boeing on March 14 seeking to cancel its order of 49 more planes; it had ordered 50, just one of which has been delivered. The deal is estimated to be worth $4.9 billion. “Continuing the Max order does not benefit Garuda,” said the spokesman, Ikhsan Rosan. “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.” 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 about 12 percent since the March 10 Ethiopian Airlines crash in which 157 people died, fell nearly 3 percent on Friday.<doc-sep>Passengers look out at American Airlines flight 718, a Boeing 737 Max, parked at its gate at Miami International Airport as people load for the flight to New York on December 29, 2020 in Miami, Florida. The Boeing 737 Max flew its first commercial flight since the aircraft was allowed to return to service nearly two years after being grounded worldwide following a pair of separate crashes. (Photo by Joe Raedle/Getty Images) MARANA, ARIZONA - MAY 16: Decommissioned and suspended jetBlue commercial aircrafts are seen stored in Pinal Airpark on May 16, 2020 in Marana, Arizona. 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(Photo by Barry Williams/Getty Images) 757 Delta CEO: The goal is for a good summer in the US JetBlue CEO on when tickets to London will be available MARANA, ARIZONA - MAY 16: Decommissioned and suspended jetBlue commercial aircrafts are seen stored in Pinal Airpark on May 16, 2020 in Marana, Arizona. Pinal Airpark is the largest commercial aircraft storage facility in the world, currently holding increased numbers of aircraft in response to the coronavirus COVID-19 pandemic. (Photo by Christian Petersen/Getty Images) Boeing's criminal investigation in the US is 'significant,' says CNN Aviation Analyst SEATTLE, WA - JANUARY 29: Members of the ground crew check out a Boeing 737 MAX 8 airliner after it landed at Boeing Field to complete its first flight on January 29, 2016 in Seattle, Washington. The 737 MAX is the newest generation of Boeing's most popular airliner featuring more fuel efficient engines and redesigned wings. (Photo by Stephen Brashear/Getty Images) (CNN Business) — Indonesian airline Garuda said Friday that it’s canceling a multibillion-dollar order for Boeing’s 737 Max 8 passenger jet after the plane was involved in two deadly crashes in less than five months. “Our passengers have lost confidence to fly with the Max 8,” Garuda spokesperson Ikhsan Rosan told CNN. The Indonesian carrier ordered 50 of the planes in 2014 for $4.9 billion. It has taken delivery of one of them but has now sent a letter to Boeing (BA) saying it no longer wants to receive the remaining jets on order, Ikhsan said. It’s the first airline to say it’s canceling a 737 Max 8 order. It’s the latest blow to Boeing over the 737 Max, its bestselling passenger jet. The planes have been grounded worldwide over safety concerns following the crash of an Ethiopian Airlines flight earlier this month. Boeing representatives are planning to visit Jakarta on March 28 to discuss the cancellation request with the airline, Ikhsan said. A Boeing spokesperson said the company doesn’t comment on “customer discussions.” Aviation authorities around the world have grounded the 737 Max following the Ethiopia crash. Many airlines have announced they won’t fly the planes until they know more about the circumstances surrounding the crash. The grounding is expected to cost Boeing billions of dollars. But most major airline customers of Boeing contacted by CNN on Friday either said they had no plans to change their orders, or that it was too soon to comment on their plans. Both American Airlines (AAL), the world’s largest airline with 24 of the jets and orders for another 76, and Southwest (LUV), which flies nothing but 737 and 737 Max planes, said they had not changed their orders. “We are, as all stakeholders, awaiting the results of the [crash] investigations. Airplane orders are part of a long-term fleet strategy,” said European carrier TUI Airlines, which has 14 of the jets and orders for 58 more. The major airlines, especially those in North America, probably will not drop any of their orders for 737 Max jets said Jim Corridore, director of industrial equity research for CFRA Research. Rival Airbus has an even longer waiting list for planes and shifting from Boeing to Airbus would put an airline at the back of the line to have its order filled. “Once they’re able to get the fix in place, I think that will go a long way to canceling any concerns about the plane,” he said. CNN reported earlier this week that US Justice Department prosecutors have issued multiple subpoenas as part of an investigation into Boeing’s certification from the US Federal Aviation Administration and the company’s marketing of 737 Max planes. The criminal investigation, which is in its early stages, began after a 737 Max aircraft operated by Indonesia’s Lion Air crashed in October, killing all 189 people aboard. The FAA has said that data and physical evidence show similarities between the Ethiopian Airlines crash, in which 157 people were killed, and the Lion Air disaster. The agency said Wednesday that Boeing has developed a software patch and pilot training program to address issues with the 737 Max identified in the Lion Air crash. The 737 Max jets are by far the most important product for the company. It has orders for nearly 5,000 of the aircraft, enough to keep production lines operating for years to come. Jethro Mullen and Sandi Sidhu contributed to this report.<doc-sep>NEW A vastly improved search engine helps you find the latest on companies, business leaders, and news more easily.<doc-sep>
Indonesia's largest air carrier has informed Boeing that it wants to cancel a $4.9 billion order for 49 Boeing 737 MAX 8 aircraft. Garuda Indonesia spokesperson Ikhsan Rosan said in a statement to the Associated Press that the airline was cancelling due to concern that “its business would be damaged due to customer alarm over the crashes.” Garuda had originally ordered 50 737 MAX aircraft, and Boeing delivered the first of those aircraft in December of 2017. The airline already operates 77 older Boeing 737 models; two of the aircraft ordered were conversions from earlier orders for 737-800s. Garuda also flies Boeing's 777-300 ER, and the company retired its 747-400 fleet in the last few years—so the airline was looking for an economical long-range aircraft to fill in gaps. But the stigma now attached to the 737 MAX 8 may have spoiled that relationship. The airline also has orders in for 14 of Airbus' A330neo, a wide-body design comparable to Boeing's 787 Dreamliner; the airline also flies 24 earlier-model A330s. If Garuda successfully breaks its deal with Boeing, the likely winner will be Airbus. Airbus' A320neo is the most comparable aircraft to the 737 MAX in cost and range. The Garuda cancellation would only put a small dent in the number of total 737 MAX aircraft on order. Based on data from Boeing, as of February there were 4,636 unfilled orders, so the outstanding order from Garuda would account for a little more than one percent of Boeing's backlog. Still, Garuda's exit could signal bigger long-term problems for Boeing as other carriers with mixed fleets of aircraft re-evaluate their positions. Indonesia's carriers as a whole make up a significant portion of existing orders (with 236 total still on order, including Garuda's 49)—and most of them were ordered by Lion Air, the airline that flew the first 737 MAX to crash. China's air carriers have 43 more 737 MAX aircraft on order currently on hold because the aircraft is grounded—and those orders could become cannon-fodder in ongoing trade disputes between China and the US. Boeing's single biggest customer for the 737 MAX is Southwest Airlines, with 249 vehicles. And it's unlikely that Southwest will cancel, because its entire fleet is based on the 737 airframe. Other major customers such as FlyDubai and the leasing company GECAS (formerly GE Capital Aviation Services) may be less reluctant to pull the plug if they see the aircraft as a potential liability.