Lion Air said to mull pivot to Airbus after Boeing orders halted

14-Mar-2019 Intellasia | Bloomberg | 6:00 AM Print This Post

Indonesia’s Lion Air, one of the biggest customers of Boeing Co.’s 737 Max plane, is considering switching to Airbus SE amid plans to suspend existing orders it has with the US plane maker, according to a person familiar with the matter.

The carrier is suspending delivery of four 737 Max jets it had on order for this year from Boeing, director Daniel Putut said at an event in Jakarta Tuesday. The decision comes after Ethiopian Airlines Flight 302 became the second 737 Max involved in a fatal crash, with one of Lion Air’s own 737 Max planes crashing in October, killing all 189 people on board.

The largest Indonesian carrier by domestic market share, Lion Air already refused to take delivery of a 737 Max jet due to be handed over in March, said the person, who asked not to be identified discussing internal matters. The carrier told Boeing about the decision last month, they said. A spokeswoman for Boeing declined to comment.

As it mulls future plans for its fleet, Lion Air is considering jets from Airbus’ A320 family, including the A321neo single-aisle model that is is similar in size to the 737 Max series, the person said. Lion Air spokesman Danang Prihantoro said the company won’t comment further on delivery plans beyond this year and will provide updates on any new developments.

Since the deadly crash on October 29, which has been blamed on a malfunctioning sensor in the 737 Max, the relationship between Lion Air and Boeing has been tense. Anger over the plane maker’s response to the tragedy prompted Lion Air’s co-founder Rusdi Kirana to say in December he planned to scrap $22 billion of Boeing jet orders. The Ethiopian crash, which bore some similarities to has added to founder Kirana’s resolve, the person said.

The latest disaster has intensified pressure on Boeing, as aviation regulators in China and Indonesia join several airlines in grounding their Max 737 fleets. Singapore went a step further on Tuesday, suspending all 737 Max traffic in and out of what is Asia’s second-busiest international airport as the Civil Aviation Authority of Singapore gathers more information on the “safety risk” associated with the Boeing plane, the authority said.

Lion Air operates 10 737 Max jets in Indonesia. National flagship PT Garuda Indonesia Persero Tbk is the only other operator in the country that has taken delivery of 737 Max planes, and their next shipment is not expected before 2020.

Losing Lion Air, the first customer to operate the 737 Max 9 globally, would be a blow to Boeing, compounding the hit from the growing crisis around plane groundings. Shares of the US plane maker 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 Chicago-based company’s most important aircraft family.

Boeing has sought to shore up confidence in the 737 Max after Lion Air Flight 610 crashed into the Java Sea on October 29. Since then, the US plane maker has emphasized the aircraft’s safety and defended the anti-stall Maneuvering Characteristics Augmentation System which triggered by erroneous sensor readings pushed the Lion Air plane’s nose down dozens of times before it crashed.


Category: Indonesia

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