Boeing takes $5 billion hit as Indonesian airline cancels 737 MAX order

Enlarge / A Garuda Indonesia 737-800. The airline is moving to cancel orders for the 737 MAX after the Lion Air and Ethiopian Airlines crashes. (credit: Boeing)

Indonesia's largest air carrier has informed Boeing that it wants to cancel a $4.9 billion order for 49 Boeing 737 MAX 8 aircraft. Garuda Indonesia spokesperson Ikhsan Rosan said in a statement to the Associated Press that the airline was cancelling due to concern that "its business would be damaged due to customer alarm over the crashes."

Garuda had originally ordered 50 737 MAX aircraft, and Boeing delivered the first of those aircraft in December of 2017. The airline already operates 77 older Boeing 737 models; two of the aircraft ordered were conversions from earlier orders for 737-800s. Garuda also flies Boeing's 777-300 ER, and the company retired its 747-400 fleet in the last few years-so the airline was looking for an economical long-range aircraft to fill in gaps.

But the stigma now attached to the 737 MAX 8 may have spoiled that relationship. The airline also has orders in for 14 of Airbus' A330neo, a wide-body design comparable to Boeing's 787 Dreamliner; the airline also flies 24 earlier-model A330s. If Garuda successfully breaks its deal with Boeing, the likely winner will be Airbus. Airbus' A320neo is the most comparable aircraft to the 737 MAX in cost and range.

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