Fri, Dec 07, 2018 - Page 10 News List

Lion Air prepares to cancel Boeing orders after crash

‘FEELING BETRAYED’:Lion is the No. 3 buyer of Boeing’s 737 Max, with 66 more on order through 2021, but questions surround the planes’ software after an October crash

Bloomberg

Lion Mentari Airlines’ owner has threatened to cancel US$22 billion in aircraft orders from Boeing Co, saying the planemaker’s response to an accident report for a recent deadly crash unfairly implicated his carrier.

“I feel betrayed,” the Indonesian carrier’s cofounder, Rusdi Kirana, said by telephone on Wednesday. “I’m preparing documents to propose cancelations. Everything is still under consideration now.”

The rupture between airline and planemaker is particularly striking since a Lion subsidiary was the launch customer for the Max, taking the model’s initial delivery in May last year.

Lion is the third-largest buyer of the updated 737, behind Southwest Airlines and Flydubai.

The carrier is scheduled to get seven of the jetliners next year, followed by 24 in 2020 and 35 the following year, said George Dimitroff, New York City-based head of valuations for Flight Ascend Consultancy, which tracks aircraft sales and leasing activity.

“Lion Air is a valued customer and we are supporting them through this difficult time,” Boeing said in a statement. “Our hearts go out to everyone who has been impacted by this, and safety remains our number one priority. 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 involved.”

Questions surrounding the crash of a two-month-old 737 Max have hovered over the Chicago-based manufacturer and weighed on its shares.

The stock has declined 4.7 percent since the Oct. 29 accident, which killed all 189 people aboard.

US pilot unions have questioned why flight crews were not alerted to new anti-stall software installed on Boeing’s newest models of the 737, a single-aisle workhorse that is the company’s biggest source of profit.

The preliminary report last month from Indonesia’s transportation safety commission did not specify the cause of the tragedy, but contrasted how pilots handled confusing anti-stall warnings on the final two flights and recommended that Lion Air improve its safety culture.

Boeing responded with a lengthy statement summarizing details of the plane’s final flights and maintenance issues.

The communique did not mention the new system on the 737 Max, which was activated by erroneous data from a sensor and repeatedly tilted the plane’s nose downward as pilots battled for control.

The Indian Directorate General of Civil Aviation has asked Jet Airways (India) Ltd and SpiceJet Ltd to advise their pilots to land 737 Max planes in case of the jet showing or developing problems regarding the “Maneuvering Characteristics Augmentation System” (MCAS) during a flight, a top official said yesterday, asking not to be identified.

Pilots must proceed to land at the nearest airport instead of attempting to complete the flight, the official said.

US pilot unions have criticized Boeing for not mentioning the MCAS flight-control software in flight-crew manuals or training for the Max.

“Ethically, nobody should give their opinion to the preliminary report,” said Kirana, who is also Indonesia’s ambassador to Malaysia. “I’m one of their biggest buyers. Right now we are in a difficult situation. As a partner, they should have helped, not give a negative impression on us.”

The airline’s potential cancellation of Boeing orders was reported earlier by Reuters.

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