Garuda Indonesia Backtracks On 737 MAX Order Cancelation (Sort Of)

Garuda Indonesia Backtracks On 737 MAX Order Cancelation (Sort Of)

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Just over a month ago I wrote about how Garuda Indonesia sent a letter to Boeing to cancel their 737 MAX order. The airline had ordered 50 of these planes in 2014, and so far has only taken delivery of one of them. Their plan was to take delivery of the remaining planes through 2030.

The president of Garuda Indonesia explained that even if they fixed the issues with the plane, he had no interest in them, because passenger confidence in the 737 MAX is lost:

“So even though they have fixed the MAX 8 system, that passenger confidence is gone. So we asked for it to be canceled.”

While there’s no denying that Boeing has lost a lot of credibility with the public as a result of this saga, I couldn’t help but wonder if there was more to this:

  • Garuda Indonesia has been through so many different management teams, and each has had a different strategy, so could it be that they were looking for an “out” on a decision that was made by a different management team five years ago?
  • Garuda Indonesia is state owned, so has a lot at stake with the 737 MAX, given that the first 737 MAX crash was with a Lion Air plane

So I wondered if this would stick, or if this was simply a bargaining technique. Well, it looks like the answer is somewhere in the middle.

Nikkei Asia Review reports that Garuda Indonesia has decided to swap their Boeing 737 MAX 8 order for a combination of Boeing 737 MAX 10 and Boeing 787 aircraft. It’s not clear yet which model of the 787 Garuda Indonesia is purchasing.

Garuda Indonesia’s president has also said that the airline “believes in Boeing aircraft and its technological capabilities,” which is quite a departure from his statement a bit over a month ago.

The deal will be worth roughly the same amount as the previous deal, so we don’t know if Garuda Indonesia just got an amazing deal, or if they’ve greatly reduced the number of planes they’ve ordered.

He says that more details will be released later this year, which suggests that maybe the revised plan isn’t totally set in stone.

The 737 MAX 10 is shorter range but higher capacity than the 737 MAX 8, so that’s logical in terms of achieving the lowest per seat cost on flights within the plane’s range.

The 787 order also makes sense on the surface. Currently Garuda Indonesia’s long haul fleet consists of 24 A330s and 10 777s. The airline also has 14 A330-900neos on order. The 787 is a nice middle-ground between the A330 and 777 for a long term fleet refresh.

This isn’t even the first time that Garuda Indonesia was going to order the 787, as they had similar plans in 2015. Like I said above, this airline can’t seem to decide on a strategy for more than a year at a time.

What do you make of Garuda Indonesia’s Boeing order swap?

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  1. Agung

    @James
    Triple bingo!
    My 5 minutes standing ovation to you.

  2. James

    @ali
    He did bring garuda to europe and 5* skytrax. As for corruption, anyone can be accused of nowdays due to political interest.

  3. Ali

    @james and emirsyah satar now is at court seat as corruption suspect.
    U praise him way 2 high.

  4. Creditian

    It doesn't matter they swap or cancel the order.
    The fact what people see is GA trying to get rid of Max 8 or even whole Max family.
    Another push of Max is dangerous whatever Boeing does.

  5. Frederik

    I miss the Garuda 747s, was a beautiful livery in London.

    I wish more airlines would order the 747-8.

  6. James

    As you've recognized, they are state owned company. Their BOD was appointed by ministry of state owned company. Their business strategy is the extension of their superior's political interest. Only Emirsyah Satar was powerful enough for a long term strategy. Nowadays, their changing like a flick of a coin

  7. Mark

    They most likely were able to use the cancellation threat at the bargaining table to get discounted deliveries on empty planes on the line over the next 10 years. That’s also why they haven’t hashed out the exact details

  8. Kobe Bryant

    No friends forever
    no enemies forever
    only interest forever

Featured Comments Load all 8 comments Most helpful comments ( as chosen by the OMAAT community ).

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Agung

@James Triple bingo! My 5 minutes standing ovation to you.

James

@ali He did bring garuda to europe and 5* skytrax. As for corruption, anyone can be accused of nowdays due to political interest.

Ali

@james and emirsyah satar now is at court seat as corruption suspect. U praise him way 2 high.

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