Report: Garuda Indonesia First Airline To Cancel 737 MAX Order

There are a lot of questions right now surrounding the Boeing 737 MAX. The 737 MAX is grounded globally following two of the planes crashing in the past few months.

While Boeing is working on a software update for the plane, it looks like the 737 MAX’s problems may go way beyond that, as questions emerge about its certification. The FBI is now even getting involved into a criminal investigation of the certification of this plane.

Several airlines have already said that they expect Boeing to pay for any costs incurred as a result of the grounding of the 737 MAX, though one airline is now going way beyond that.

Garuda Indonesia is canceling their order for Boeing 737 MAX aircraft. The airline ordered 50 of these planes in 2014, and so far has taken delivery of only one of them. The plan was that they’d take delivery of the remaining planes all the way through 2030.

While this has been rumored for a while, Indonesian media is reporting that today the president of Garuda Indonesia has sent a letter to Boeing to cancel the order.

As he explains, even if the plane’s problems are fixed, passenger trust in the aircraft would not return, and for that reason he doesn’t want his airline to take delivery of the remaining planes. As he explained:

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

I’ll be curious to see what exactly comes of this. I imagine he expects they’ll get back whatever deposit they’ve put down with Boeing, and I’m also curious what this means for the one 737 MAX that the airline already has in its fleet, once the plane is cleared to fly again.

Currently Garuda Indonesia’s narrow body fleet consists exclusively of Boeing 737s, as the airline has 73 Boeing 737-800s in their fleet. There’s a lot of commonality between the “standard” 737 and 737 MAX, so to see the airline lose trust in Boeing is a huge step.

Presumably this means the airline would instead be going with Airbus narrow body aircraft in the future.

I don’t doubt that Garuda’s president has sent this letter to Boeing, though I can’t help but wonder if they’re fully serious about canceling this order. This would represent such a radical change for their fleet, and that’s a costly undertaking.

Let’s keep in mind that the president has been working at state-owned enterprises in Indonesia for a long time. Indonesia-based Lion Air was one of the two airlines to lose a 737 MAX, so Indonesia also has a lot at stake with this plane when it comes to both the loss of life and liability.

I’m curious to see if other airlines follow Garuda Indonesia’s lead, and if Garuda Indonesia can’t be talked out of their decision.

Do you think we’ll see more 737 MAX order cancelations? 

(Tip of the hat to WP)

Comments

  1. I personally do, mainly because of the amount of press this continually keeps getting around the globe. Even though the issue may eventually be fixed and the planes deemed safe, I think public trust is already long gone.

  2. I’d imagine Airbus gave them a pretty good deal to cancel the Boeing order, otherwise Garuda will be left with their pants down if they cancel first and then call Airbus with no other option for planes.

  3. I’ve been a fan of the Boeing company ever since I was a child. I believe it’s one of the few great American companies which truly shaped the aviation industry in the last century.

    However; this is no 787 issue. This time they truly screwed up. Over 300 lives have been lost due to a problem which shouldn’t exist in the first place let alone have the aircrafts operate in the market. What’s shocking is their relentless in grounding the aircraft when pretty much the entire world was for it.

    Airlines will and SHOULD cancel their orders because unlike Boeing; the customers for the airlines are end consumers such as ourselves and our safety is in our hands or the airlines.

  4. Hi Ben,

    No article on the brewing tension between 9W and EY? I come to your blog everyday hoping to read your view on that.

  5. Thank you Garuda for doing the right thing. Even after Boeing’s “fix,” there is no way that I will ever fly on a 737 max ever again. Nothing can fix the fundamental design flaw with this plane.

  6. I think with the EU and Canada talking about recertification of the MAX8 and 9 before they can fly again, we might see the 350+ aircraft in operation all heading to the desert. I suspect if some of what the FAA is now saying pans out, the plan will be for a redesign of the aircraft, and we’ll perhaps see newer models in the sky in 2021 or 2022. The NG will come back as Boeing’s “latest” 737 in the short term. I could be very wrong here, but it will be interesting to see if my prediction is true.

    If a redesign isn’t ordered, I think the MAX will start to make the A380 look like a huge success, as almost nobody will order any more of them.

  7. Lucky,

    It’s not just Boeing, if you saw the articles yesterday, the Lion Air plane had been reported to have issues on its previous 4 flights, and then Lion Air maintenance team cleared it to fly even though the angle of attack sensor was determined to be giving bad data to the computer.

    While yes Boeing should have tested their software better in the first place, the accident was still preventable down chain.

  8. I personally thought this is a great move, garuda can change their 737 max orders to 787 and can fly long haul efficiently, something that they cant do now since their A330 and B777 is not small enough… and also by switching to airbus, they could use A320Neo family to their advantage by buying the A321LR to serve the secondary japanese and australian market from denpasar….

  9. In two years nobody will remember the MAX crashes. This move is a nice way to get a discount from Boeing, and i am curious to see how Boeing will manage the situation. They better focus on fixing the technical issues very very quickly…if they can…

  10. @DAVID and others.
    I personally suspect there is a fundamental design issue with the MAX. It is based on the original 737 model which is limited in height and through the years required more and more tricks to accommodate engines that are physically larger.
    Remember, the stretched 321 models have their own concerns. Pilots have to be very cautious with their takeoff to avoid tail strikes because of the lengthened fuselage. eventually there will be tail strikes that will lead to catastrophe.

  11. Indonesia is a corrupt country. they have an election coming and all this might be for a show.
    Aviation safety despite getting better is appalling compared to neighboring singapore or malaysia.

    Plane fails all the time (doesn’t matter if it is due to design flaw or accident).
    Question is could the two accident be prevented if pilots aviate, navigate and communicate?
    Similar to Sully’s case, their engine failed (albeit due to bird strike and not due to design flaw) but if they follow “protocol” published by cactus and airbus, they would’ve crashed.
    Both ethiopian and lion accidents were on a clear day and they could’ve flown visually…

    Will airliner stop flying max once issue is resolved? probably not. will boeing make profit out of 737 max? probably not.

    It is interesting how so many people are afraid of flying in the max when the no 1 highest fear from surveys are not death but public speaking. There must be so many people afraid of public speaking out there.

  12. Exaggerated or not, I agree with Garuda’s assessment of passenger confidence in 737MAX. The proposed MAX routes may be in direct competition with airlines that primarily fly Airbus (e.g. AirAsia) and potential customers may jump ship just based on that. Also you’d have to agree that the “fear factor” (of 737MAX) is greater in Indonesia compared to a country like US where no MAX fatalities were experienced. With a long backlog for A320Neos Garuda’s not in a great position busienss-wise. How about switching orders to 737NGs?

  13. Actually, I believe that once they get to the bottom of this and the fix is implemented, most airlines with orders will take their deliveries.

  14. I, too, think we’ll see more cancellations of orders based on two issues – both related to the court of public opinion which can be even more disastrous than civil/criminal court:

    1. Press reporting that the “fix” was classified as an “optional feature” when it was very clearly related to safety. Whether true or not, if there’s any veracity to that claim whatsoever, Boeing will be a company that put profits before safety. Huge blow for customer (pax) trust in the company, its engineers, and its leadership.

    2. Criminal investigations started/pending. USDOJ now involved. Subpeonas flowing. In a situation like this, I think Boeing – rightly or wrongly – is innocent until proven guilty. Again, another huge blow to trust in the company itself.

    Personally, from what I’ve read/know to date, I hope Boeing gets raked across the coals from both a financial and criminal/civil perspective. I’m open to having my mind changed, but I’ve seen minimal facts that suggest Boeing had any intention of doing the right thing when they saw a problem. They gambled on a piss-poor CYA method and now it’s coming back to haunt them.

  15. i wonder what will happen to the Boeing’s management when they got rewarded for the success of the MAX, and now this debacle.

  16. There’s two things that may happen:

    1. Airlines cancels their MAX orders and go to airbus and airbus would say sure but you’ll have to wait 5 to 10 years for delivery.
    2. They would turn to China’s COMAC for planes. (Raise your hand if you’re comfortable with a mass produced chinese plane)

    Both scenario would force the airlines to go back to Boeing.

  17. @Mark “I’d imagine Airbus gave them a pretty good deal to cancel the Boeing order” maybe not… apparently Airbus’ narrow body production capacity is maxed out until 2023 so they are unlikely to be able to fulfill a large change in orders from 737 Max to A320neo.

  18. @Donnie: I suspect that if you’re the type to boycott an airline because they didn’t by American (keeping in mind, they have plenty of *other* Boeing aircraft), then you weren’t the type who was going to be flying Garuda Indonesia soon anyway.

    More like Allegiant.

  19. I do expect airlines to cancel their orders. Some airlines that are in deep financial woes will use these incidents to get out of their contracts.
    With all the current revelations like the latest where we found out the Boeing didn’t really want the 737Max until AA was firmly ordering A320Neos doesn’t add any trust to the plane. I mean, i still don’t trust the Dreamliner….

    That said, i don’t think it’ll be that easy to get out of their contracts not unless the plane is grounded for life and discontinued.

  20. I will always see the 737-MAX for what I always believed it to be,
    A cheapskate, slapdash and too ambitious solution using a 50 year old short haul narrow-body to alleviate the mistake of ending 757 production in 2004 and not planning a replacement to arrive until at least 2025.

  21. @Donato more than 20 years in service and an impeccable safety record. I doubt it. Also: Airbus aircraft have fly by wire protections designed to prevent this exact situation

  22. @Frederik Boeing had a total of THREE outstanding orders when the 757 line was closed. It made no sense to keep it open. The 757 is an old design in itself. What Boeing should have done instead of the MAX was the new small aircraft design that never materialized

  23. With FBI investigating the certification, it is unlikely that aircraft will be back in air soon. Reports on other aviation sites that may be grounded for at least 12 months!
    Garuda has realised that they may not get the new aircraft they need for quite a while!
    Airlines cannot have aircraft on their books not flying
    Will have some alternative plan under way and would expect an announcement soon re order for something else or a leasing deal. Many other 737max operators will probably do same over next few weeks

  24. I don’t think that a switch to Airbus narrow bodies would be too costly of an undertaking for Garuda because their Citilink subsidiary almost exclusively consists of A320s.

  25. Garuda’s budget arm, Citilink (the green Garuda, is operating 51 A320s. Therefore for Garuda mainline (the blue Garuda) to switch from all Boeing to all Airbus narrowbody is not an issue at all because they already operate a large fleet of the A320s.

  26. Is there any insight into the practicalities of crew responding to the aircraft repeatedly forcing a nose down position at say 3,000 ft vs say 20,000 ft?

    Logic suggests that they might find the right page in the manual if at the latter altitude, and therefore before hitting earth, but little hope just after take-off, when both incidents occurred.

    There have been reports that other pilots have recovered by disengaging the software but no indication of the altitude and time it took them to implement that.

  27. Good luck with that Garuda, they will be waiting 10 yrs for Airbus planes. Other operators will snatch up the MAX delivery slots asap.
    As previous poster mentioned, nobody will care 2 yrs from now, nobody…
    A pure Duopoly – nowhere to go.

  28. Airlines that want a fuel efficient plane will be well advised to order the C300.

    Oh ya – Trump forced the sale to Airbus …. but it’s still a Bombardier C300 in A220 clothing . Built safely and honestly in CANADA

  29. This is Asia, some of this move is designed to save face – name your motivation as elections, political system, actual public concerns etc. I’d suggest that if any airline was going to cancel, it’d be one from Indonesia or Ethiopia due to the very real local impact of the crashes.

    The bigger story here I think is the emerging requirement from countries to certify airframes on their own, and not take the FAA’s guidance as has happened in the past. That will mean the release of an A390 or B797 won’t be the same across the globe and will impact launch carriers.

  30. Agree that with Airbus A320 production booked up for the foreseeable future, any 737 MAX defections will likely benefit the A220. Oh (Canada), the irony.

  31. @Azamaraal you obviously havent heard about Bus building a production line for it in Alabama and no we dont want that as the 11th province. As a proud Canadian I resent the $4.5B in my taxes it took to get this white elephant to market.
    @Claus you nailed it
    Lets see: An airline that hasnt made money since – oh wait never consistently profitable from birth . 3 CEOs (give or take) in the past 5 years. Too many airplanes ordered which they cant make money with. Indonesian election this year. Can anyone say political football.
    Yes Boeing turned the MAX situation into a royal goat f*** but does anyone remember the early years of the 320s entry into service? Bus eventually got that fixed and Boeing will too. Trouble is the MAX is not your granddad’s old 737 and Boeing obviously didnt emphasize this enough in the training.
    BTW a news item has now surfaced where it is claimed the ET captain hadnt taken any of the simulator training he was supposed to. Cant blame Boeing for that. Relatives describe him as confident and bold. There are old pilots and bold pilots but very few old bold pilots, as the ancient saying goes.

  32. Wise decision. The 737Max will not fly anytime soon again as it will require a hardware redesign.
    More cancellations will follow. It will take Boeing 10 years to recover from mistakes.

  33. @Donato

    I know that the A321 has issues on their pw and the tailstrike that you mentioned.. but indonesians tend to have a stigma on crashed planes.. even now, some of the people that i know is still afraid to fly the sukhoi superjet 100 and indonesia airasia even though their crashes is caused by pilot error.. their statement on passenger confidence is correct since 90% indonesians dont know or pretended to know about airplanes.. personally i will fly on the 737 Max after the redesign.. but hey, im the 10% 🙂

  34. First off the wait for a new airbus narrow body is about 7 years. Planes crash and people fuck up. Its the fact of life. Someone of some people screwed the pooch. Its not greed, its called stupidity

  35. Just something to add here:Garuda could just be seeing this as a way to get out of its 737 MAX commitments.

    Indonesians have long been hearing that Garuda no longer wants the 737 MAX jets anyway. Its current NG fleet is relatively young and the airline just this year stated it had extended the lease on that fleet through to at least 2030 for some of the newest planes, which were delivered in 2015.

    The MAX planes were ordered in a different era, back when the airline had a lesser financial responsibility to remain profitable. The plan was never to replace the NG jets anyway, but to expand on its narrow body fleet. But as soon as profit became a target, they opted to defer deliveries as long as possible. The first one is a result of failing to defer far enough in advance, which is the reason why they have a single MAX 8.

  36. @Joeboo
    GA honestly doesnt need them. Their 737 NG fleet is young and well maintained, with the oldest ones barely being 9 years old.

  37. @AlanD

    ‘ I could be very wrong here’ Well, you are correct about that. Sorry, but what you are suggesting has 0% likelihood of coming true. I cannot say any more than that since I could be considered a source, but I suggest doing research on how development and production cycle for major aircraft programs work if you are curious.

    Also, what WP is saying is more likely closer to truth. Garuda probably doesn’t need the planes and it’s a good excuse to bail. Going to Airbus isn’t an option if they really need the planes sooner than later, as both manufacturers have huge backlogs.

  38. Hopefully Boeing will get to the bottom of the problem quickly but if a software fix is truly the solution, then the company should be found criminally liable for allowing the MAX to continue to fly without the fix being implemented and/or without ensuring that all pilots have received the proper training. One could argue that it is the airlines responsibility to ensure pilot training but we have all seen the reports of Boeing not having even provided manuals on the newer systems. This is nothing like the 787 issues which did not result in loss of lives.

  39. This is payback for Boeing trying to duck the issue by pointing at Indonesian airline safety culture when they very well knew that the same problem had happened at American and the only reason American did not have a crash was American had the optional AoA disagree sensor. That sensor should never have been an optional item once MCAS was added to the 737 Max.

    You tried to drag Indonesia’s name through the mud.Now they will drag it yours through the mud. And it will keep coming in drips. remember they have promised to take an entire year to do the investigation so anytime Boeing stock is recovering they will leak something damaging from the investigation.

  40. Could someone explain this?

    I am scheduled to fly tomorrow WAW-MAD on the LOT 737 MAX. They grounded it and replaced the route with the 734 and 738 but since Wednesday they began flying the MAX again. They flew it today’s flight and yesterday’s. How are they flying it now if it is still grounded?
    Im not necessarily scared to fly on it but am unsure how this is possible because from what I read it is still banned in Euro airspace

  41. @Greg

    Oops forgot about those. Theres like 3 planes left and seeing their FR24 history, I dont think it would be a big loss if they just got rid of them entirely.

  42. GOOD. The A320neo is more comfortable for passengers, anyway, and subsidiary Citilink already operates the type. Maybe they’ll even downsize and get A220-300s, go the way of the Swiss? I want to remind everyone how unbelievably narrow the lavatories on the 737 MAX are. That is what Garuda flyers won’t have to face.

  43. “This is payback for Boeing trying to duck the issue by pointing at Indonesian airline safety culture when they very well knew that the same problem had happened at American and the only reason American did not have a crash was American had the optional AoA disagree sensor. ”

    Actually the reason the few instances that occurred to US carriers ended in safely completed flights (not even returns to origin) is that THOSE crews were properly trained in how to disable the trim system in event of a failure. That complex procedure consists of flipping two switches immediately below the throttles and…. no “and”, that’s it. As for safety culture, the facts of the preceding days in the Lion Air flight where a ride-along pilot saved the crew by advising this action raise very valid questions on crew training. The procedure for stabilizer shutoff has been unchanged for fifty years regardless of which added options are ordered with the aircraft. The base option package is the basis for the aircraft’s certification and includes all the equipment needed for a competent flight crew to safely operate the MAX. The first was not enhanced in the aircraft in question through the finance-driven choice of the airline, the second was not provided in the form of failure mode training of the crew. Both are indicative of safety culture far more than any press statements or posturing.

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