Boeing Faces Another Blow As Garuda Indonesia Cancels $4.9B Order For 737 Max Jets

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Indonesian airline Garuda is calling off its $4.9 billion order for 49 Boeing 737 Max 8 passenger planes in the wake of two fatal accidents involving the variant. Garuda is the first airline to formally scrap an order for the 737 Max 8. On Friday, the airline said that passengers have lost trust in the troubled aircraft that has claimed the lives of 346 people in less than five months.

“We have sent a letter to Boeing requesting that the order be cancelled. The reason is that Garuda passengers in Indonesia have lost trust and no longer have the confidence,” said Garuda Indonesia spokesman Ikhsan Rosan.



Rosan said that the airline sent the letter on March 14. He also added that Boeing has sent its representatives to Indonesia for further discussion with the airline’s executives on March 28. The crashes of Ethiopian Airlines Flight 302 and Lion Air Flight 610 have forced hundreds of airlines around the world to ground Boeing 737 Max jets, and sparked numerous investigations.

Experts are yet to find conclusive evidence to prove that the two crashes are linked. However, investigators analyzing the flight data black box of the Ethiopian Airlines flight in France say a preliminary review points to clear similarities.

Investigators have cast spotlight on the Maneuvering Characteristics Augmentation System (MCAS) that Boeing introduced on 737 Max 8 jets. The system is designed to automatically prevent the aircraft from losing lift, or entering into a stall.

Lion Air flight 610 plunged into the Java Sea on October 29, 2018 twelve minutes after taking off from Jakarta, Indonesia. All 189 passengers and crew aboard perished. On March 10, 2019, Ethiopian Airlines Flight 302 crashed six minutes after taking off from Addis Ababa, Ethiopia en route to Nairobi, Kenya. The crash killed all 149 passengers and eight crew members on board.

Flight data recovered from the Lion Air flight showed that pilots struggled to control the plane as its MCAS system kept forcing the nose down after takeoff. An-off duty pilot in the cockpit of the same Lion Air jet had managed to override the automated anti-stalling system a day earlier.

Shares of Boeing Co. (NYSE: BA) were down 2.32% to $364.09 as of 11:32 a.m. EDT. The stock is up more than 13% year-to-date.

Boeing Co. Profile

Boeing manufactures commercial airplanes, provides defense equipment, and maintains a small captive finance division. With headquarters in Chicago, Illinois, the firm competes with Airbus in commercial aviation and with Lockheed, Northrop, and several other firms in defense. Sales are split about 70% and 30% between the commercial aircraft and defense end markets. In 2018, Boeing generated over $100 billion in sales.

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