Lion Air may cancel Boeing orders, SE Asia News & Top Stories – The Straits Times

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Lion Air may cancel Boeing orders, SE Asia News & Top Stories – The Straits Times

PARIS/JAKARTA • Indonesia’s Lion Air is reviewing plane purchases from Boeing and has not ruled out cancelling orders as relations worsen in a spat over responsibility for a 737 jetliner crash that killed 189 people in late October, sources told Reuters.

Group co-founder Rusdi Kirana is furious over what he sees as attempts by Boeing to deflect attention from recent design changes and to blame Lion Air for the crash, while the airline faces scrutiny over its maintenance record and pilots’ actions, said the people, who have knowledge of the matter.

Mr Rusdi is examining the possibility of cancelling the remaining orders of Boeing jets “from the next delivery”, said one of the sources.

Another source said the airline was looking at cancelling orders.

Mr Rusdi, a former group CEO who is now Indonesia’s ambassador to Malaysia, remains closely involved with Lion Air and hosts a monthly meeting in Kuala Lumpur with the heads of the group’s airlines based in Indonesia, Malaysia and Thailand, according to the second person and an industry source.

It is not clear how much of the airline group is owned by Mr Rusdi.

No final decision has been made by Lion Air, but discussions over the fate of the remaining orders highlight the stakes surrounding a probe involving Boeing’s fastest-ever selling jet, the 737 MAX, which entered service last year.

Lion Air has 190 Boeing jets worth US$22 billion (S$30 billion) waiting to be delivered, on top of 197 already taken, making it one of the largest US export customers.

Any request to cancel could be designed to put pressure on Boeing and may need lengthy negotiations.

Many airlines defer orders, but industry sources say aerospace suppliers rarely allow much scope for unilateral cancellations.

A Boeing spokesman said: “We are taking every measure to fully understand all aspects of this accident, and are working closely with the investigating team and all regulatory authorities. We are also supporting our valued customer.”

Mr Rusdi, who co-founded the airline with his brother in 2000, ordered the review of airline purchases in response to Boeing’s statement last week focusing attention on piloting and maintenance topics, one of the sources said. Boeing released the statement focusing on maintenance actions spread over four flights in the run-up to the fatal flight on Oct 29 after investigators issued an interim report that did not give a cause for the crash.

Boeing is also examining software changes in the wake of the crash, while insisting longstanding procedures exist for pilots to cancel automated nose-down movements experienced by the 737 MAX in response to erroneous sensor readings.

It has come under fire from US pilots for not mentioning the MCAS system – a modification of existing anti-stall systems – in the manual for the 737 MAX, which began service last year. “Why are they changing (software) if there was nothing wrong?” a person familiar with Mr Rusdi’s thinking said.

Boeing has said all information necessary to fly the 737 safely is available to pilots and that its workhorse model is safe.

Bankers and some analysts say Lion Air and its South-east Asian rivals have over-expanded.

But the row highlights an unusually polarised dispute over the possible causes of the crash.

Experts say most accidents are caused by a cocktail of factors and parties rarely comment in detail before the final report, which often follows a year of analysis. In its statement, Boeing recapped the interim report and listed questions on maintenance and pilot behaviour that it said remained unanswered in the 78-page document, but did not mention the MCAS modification covered in an earlier safety bulletin.

It is not the first time an airline has clashed with its supplier after a crash. AirAsia Group clashed with Airbus after its Indonesian subsidiary lost an A320 in 2014. It continued to take deliveries, but ties never fully recovered.

REUTERS

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