Lion Air Considers Canceling Giant Boeing Order After Indonesia Crash

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Lion Air’s co-founder says the giant low-cost carrier may cancel orders for more than 200 Boeing planes as relations between the two companies sour over an air crash that killed 189 people in October.

Canceling the orders could deprive the Chicago-based plane maker of one of its largest customers. Lion Air Group, which in 2017 became the first company to commercially operate a MAX jet, Boeing’s latest iteration of the 737, is one of the world’s top buyers of the planes.

It has ordered 251 of them with a list price of more than $25 billion. On Boeing’s list of publicly identified customers, only Southwest Airlines, with 280 orders, is scheduled to receive more of the planes.

Aviation analysts, however, expressed skepticism that Lion Air could alter a major order, which typically involve deposits and include penalty clauses for canceling. Deposits alone can amount to around 5% of purchase price, although may only be made on planes closer to delivery dates.

Investigators in the Indonesian-led probe have suggested a malfunctioning sensor on Flight 610 led the plane’s anti-stall system to activate, repeatedly forcing the nose of the plane down even as pilots struggled to raise it.

Data from the plane’s flight-data recorder, retrieved shortly after the crash in about 100 feet of water, showed the system activated more than two dozen times in the final minutes of the flight.

After the crash, Boeing issued a bulletin to operators about how to deal with the problem. Some regulators, pilots and others have publicly criticized the company for failing to highlight the operating principles and potential hazards of the new anti-stall system, which wasn’t installed on older 737 models.

The investigators say they won’t draw conclusions about what caused the crash until a final report next year. After the investigators issued their interim findings last week, Boeing released a statement drawing attention to possible maintenance deficiencies at Lion, noting that maintenance performed in the days before the fatal flight failed to fix problems with the jet.

It also compared the actions of the jet’s penultimate flight, when a pilot experiencing problems turned off automatic anti-stall measures, with those of the fatal flight, when the pilot appeared not to. It didn’t mention the new anti-stall system installed on the MAX jets.

Boeing responded in a statement, saying that “Lion Air is a valued customer and we are supporting them through this difficult time. We are deeply saddened by the tragic accident at Lion Air.”

It added that “We are taking every measure to f ully understand all aspects of this accident, and are working closely with the investigating team and all regulatory authorities involved.”

Boeing Chief Executive Dennis Muilenburg has previously denied the company intentionally withheld information about the stall-prevention feature and said Boeing had described its relevant function in its manual.

Mr. Kirana, a former chief executive of Lion Air Group who owns much of the company, said Lion Air executives had yet to speak formally with Boeing about the matter but that he would make a decision soon.

2 thoughts on “Lion Air Considers Canceling Giant Boeing Order After Indonesia Crash

  1. Pingback: Boeing raises its dividend 20%, Despite growing concerns that the global economy is slowing down – Stock Market News Today

  2. Pingback: After Ethiopian Airlines Crash About 40% Of The Global Fleet Of 737 MAX Planes Are Parked – Today’s Stock Market News

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