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Lion Air may scrap Boeing jet order

Rusdi Kirana, co-founder of low-cost carrier Lion Air Group, is said to be considering a cancelation of the US$22 billion order of Boeing 737 MAX aircraft following the recent crash of its flight JT610, which used the MAX-8 type, as he expressed his disappointment over how the jet manufacturer responded to the fatal accident

Riza Roidila Mufti (The Jakarta Post)
Jakarta
Fri, December 7, 2018

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Lion Air may scrap Boeing jet order

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usdi Kirana, co-founder of low-cost carrier Lion Air Group, is said to be considering a cancelation of the US$22 billion order of Boeing 737 MAX aircraft following the recent crash of its flight JT610, which used the MAX-8 type, as he expressed his disappointment over how the jet manufacturer responded to the fatal accident.

“I feel betrayed,” Rusdi said by phone Wednesday, as quoted by Bloomberg. “Everything is still under consideration for now.”

Rusdi is said to be disappointed with Boeing, especially after the jet maker’s official statement summarizing details on the final flight and maintenance issues of the ill-fated JT610. The summary was Boeing’s response to a preliminary report on the crash released by the National Transportation Safety Committee (KNKT).

“For ethical reasons, nobody should state their opinion on the preliminary report,” Rusdi told Bloomberg. “I’m one of their biggest buyers. Right now, we are in a difficult situation. As a partner, they should have helped, not create a negative impression about us.”

Rusdi and Lion Air president director Edward Sirait could not be reached by The Jakarta Post on Thursday.

The airline mogul was reportedly preparing documents to propose a cancelation of the order, saying he was ready to deal with the consequences later, Bloomberg reported.

When the Post asked for details, Lion Air spokesman Danang Prihantoro declined to comment, explaining that the company was still seeking “clarification on the news source regarding the validity of the information”.

United States-based Boeing Co. stated on Thursday that it was unable to provide specific comments on customer discussions but stressed it was “taking every measure to fully understand all aspects of the accident”.

“[We] are working closely with the investigating team and all regulatory authorities involved. We are also supporting our valued customer through this very tough time,” said Boeing in a statement.

According to data from Boeing’s official website, the 737 MAX is the fastest-selling airplane in Boeing’s history, accumulating orders for nearly 4,700 aircraft from more than 100 customers.

Lion Air, officially called PT Lion Mentari Airlines, is the third-biggest purchaser of the updated Boeing 737 MAX aircraft, after Southwest Airlines and FlyDubai.

The Lion Air Group in 2011 announced its commitment to ordering aircraft of the 737 MAX family. Company data show that it has so far ordered 218 MAX-8, four MAX-9 and 50 MAX-10 aircraft.

The airline has so far received 11 MAX-8 and two MAX-9 planes.

Lion Air is not the only Indonesian airline having ordered aircraft of the 737 MAX family from Boeing, as national flag carrier Garuda Indonesia also operates the MAX 8. When contacted by the Post on Thursday, Garuda Indonesia president director I Gusti Ngurah Askhara Danadiputra, popularly known as Ari Askhara, said the airline would keep its orders for the MAX 8.

“As of today, there is no plan to cancel the order [...] So far, the plane has caused no problem at Garuda Indonesia,” he said, adding that Garuda had 50 orders for the aircraft until 2030.

Ari said Garuda had received one of the ordered aircraft, and three more were scheduled for delivery in 2020, while the rest would be delivered gradually until 2030.

Aviation expert Gerry Soejatman told the Post that aircraft order cancellations by airlines were “normal” and might happen for various reasons.

“Ordering aircraft means an airline has made a commitment to purchasing planes in the production line, but it has yet to make a payment; the buyer may cancel at this stage,” he said.

“I think from hundreds of aircraft that Lion Air Group ordered from Boeing, only few have been put in place [for payment],” Gerry said, adding that a ‘firm order’ was a process in which a deposit has been transferred.

He acknowledged that Lion Air might be disappointed with Boeing, due to the lack of information regarding the newly modified antistall system on 737 MAX aircraft known as MCAS.

This MCAS system is in the spotlight as it is believed to be the problem the pilot of Lion Air flight JT610 was battling before the eventual crash on Oct. 29. Reuters reported that the MCAS had repeatedly forced the airplane’s nose downward while being fed incorrect data from a faulty sensor.

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