Indonesian airline Garuda is canceling its $6 billion order for 49 Boeing 737 Max jets - Southern Business Review


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Thursday, March 21, 2019

Indonesian airline Garuda is canceling its $6 billion order for 49 Boeing 737 Max jets

Airline Garuda Indonesia said Friday it is requesting a cancellation to its current order for 49 Boeing 737 Max jets valued at $6 billion.

Newswires Reuters and AFP both reported the company's plans.

Reuters, citing Garuda's CFO, said the company may change its 737 Max order to another type of Boeing jet. The national carrier of Indonesia did not explain why it no longer wanted the planes.

In response to CNBC's request for comment, Garuda spokesman Ikhsan Rosan said the airline sent a letter to Boeing on March 14 to cancel its order for the 737 Max jets. Garuda has not heard back from Boeing, but the aircraft manufacturer will visit Jakarta on March 28 for "further discussion," said Rosan.

Garuda currently only has one Boeing 737 Max 8 in its fleet, according to Reuters.

The Indonesian airline is the first to publicly confirmed plans to cancel an order for the Boeing jets after two fatal crashes involving the 737 Max 8. The planes have been grounded by authorities in multiple countries — including in the U.S., Europe, China and Indonesia.

A Boeing 737 Max 8 operated by Indonesia's Lion Air crashed into the Java Sea last October, killing all 189 people on board. Investigators suspect a malfunction in the flight control system is a contributing factor to both crashes.

Less than five months later, the same plane model operated by Ethiopian Airlines crashed. None of the 157 on board the flight survived. Ethiopian Transport Minister Dagmawit Moges said that preliminary data retrieved from the plane's flight data recorder showed "a clear similarity" with the Indonesian crash.

The two incidents have also led to the U.S. Department of Transportation to ask for an audit of the Federal Aviation Administration's approval of Boeing's 737 Max 8 planes, while the FBI has reportedly joined in a criminal investigation of the certification process for the jets.

— Reuters contributed to this report.