The breaking news out of Jakarta is that Garuda Indonesia has canceled their order for 49 Boeing 737 MAX. This comes after two disastrous 737 MAX crashes and a worldwide grounding of the aircraft for safety reasons. Garuda’s Order Garuda operates over 70 737 family aircraft. As such, the 737 MAX was a natural addition to the fleet and part of the 737NG replacement plan. At face value, Garuda’s order was worth $4.9 billion. At the point of ordering, Garuda commented: “The 737 MAX 8 represents a bright, efficient future for Garuda Indonesia.” -Emirsyah Satar, CEO of Garuda Indonesia at time of order While the 737 MAX 8 is more efficient than its predecessor, it seems like it wasn’t bright enough to keep Garuda a customer for the aircraft. The Cancellation Garuda Indonesia’s President Director, Gusti Ngurah Askhara Danadiputra, announced the cancellation on Thursday, March 21st. In his comments, he specifically stated that the 737 MAX 8 had suffered from bad publicity which spooked passengers allocated the aircraft. Specifically, Garuda Indonesia believes there is a lack of passenger confidence in the aircraft, so they are cancelling their order. This isn’t a major issue for Garuda Indonesia since they only have one 737 MAX 8. Depending on how long the groundings of MAX aircraft last, Garuda could find a new buyer or lessor for that specific aircraft. They could also, potentially, sell it back to Boeing. The real question now is, what is Garuda going to order? A320neo? Garuda Indonesia is already an Airbus customer. They operate both the A330-200 and -300 widebodies. In addition, Garuda Indonesia has 14 A330-900s on order. Cancelling the 737 MAX leaves Garuda with few options for sourcing a narrowbody replacement for their 737-800s. Russia is working on an alternative, however Garuda will most likely be looking for an established plane with a degree of passenger confidence. They will probably go for a fuel efficient plane that carry a similar number of passengers as the 737 MAX. This makes the A320neo the most likely option for Garuda Indonesia. If they were to order 50 aircraft, the airline would probably attract some discounts from Airbus. This would make the delayed entry, any cancellation fees with Boeing, and increased maintenance and training costs worth it, if it means passengers will still fly with them. The A320neo, however, would not be completely new to Garuda. Their low-cost arm, Citilink, flies over 50 A320/A320neo family aircraft already. Overall In the grand scheme of things, Garuda Indonesia is not a major 737 MAX customer. Norwegian, SpiceJet, Ryanair, Jet Airways, Lion Air, Flydubai, and Southwest all have over 100 737 MAX aircraft each on order. However, if Garuda Indonesia is expressing concern about the 737 MAX, it is likely that other airlines are also concerned about their 737 MAX fleet and orders. We will keep a close watch on what other carriers do with their 737 MAX orders. Is Garuda making the right decision? Will Garuda transition to an all-Airbus fleet? Let us know in the comments.<doc-sep>"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.<doc-sep>Indonesia's national carrier Garuda has cancelled a multibillion-dollar order for 49 Boeing 737 MAX 8 jets after two fatal crashes involving the plane. It is thought to be the first airline to publicly confirm cancellation of an order for the model. Garuda spokesman Ikhsan Rosan said the company had sent a letter to Boeing "requesting that the order be cancelled". He said Garuda passengers in Indonesia had "lost trust" and no longer have "confidence" in the plane, adding that the airline was awaiting a response from Boeing. The Indonesian airline ordered 50 Boeing 737 MAX 8 jets in 2014 for $4.9bn (£3.7bn). Advertisement Image: The cause of the Ethiopian Airlines crash is still being investigated It has already received one of the planes, and Mr Ikhsan said the carrier was in talks with Boeing about whether or not to return it. The airline has already paid Boeing around $26m (£19.8m), Garuda's director, Gusti Ngurah Askhara Danadiputra, told Indonesian media outlet Detik. "In principle, it's not that we want to replace Boeing, but maybe we will replace (these planes) with another model," he said. The scrapping of the order comes amid reports that Boeing would be making a safety feature - a cockpit warning light - standard on its 737 MAX 8 aircraft. The feature was previously optional. It is expected to be offered as part of a software update to the MAX fleet that was grounded in the wake of the Ethiopian Airlines crash earlier this month. The crash left 157 people dead. ET302 was on its way to Nairobi in Kenya at the time of the crash. Nine Britons were among the dead. Please use Chrome browser for a more accessible video player Father of dead pilot: 'My son is dust' In the aftermath of the tragedy, Boeing promised to upgrade some flight control software "in the coming weeks". It has since also grounded its entire global fleet of 737 MAX 8s and 9s. The cause of the crash is still being investigated, but the pilot had reported difficulties and requested to return to the airport. A Lion Air plane of the same model crashed into the Java Sea in October last year, shortly after taking off from Jakarta, Indonesia - killing all 189 on board. Earlier this week, it emerged the pilots of the aircraft frantically scoured a manual before their plane crashed Recordings from the cockpit suggest the pilots were struggling to understand why the jet was lurching downwards, but ran out of time before it hit the water.<doc-sep>
Jakarta: Indonesia's national carrier Garuda will call off a multi-billion-dollar order for 49 Boeing 737 Max 8 jets after two fatal crashes involving the plane, the company said Friday, 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," said Garuda spokesman Ikhsan Rosan. "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. Garuda had already received one of the 737 MAX 8 planes, he said, part of a 50-plane order worth $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 $26 million, while Garuda's chief 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. This month, Indonesia's Lion Air said was postponing taking delivery of four new Boeing 737 MAX 8 jets after an Ethiopian Airlines Boeing 737 MAX 8 went down minutes into a flight to Nairobi, killing all 157 people on board. That came after a Lion Air jet of the same model crashed in Indonesia in October, killing all 189 people on board.