The costs faced by US planemaker Boeing after two consecutive crashes of its 737 Max jets are mounting, and the first airline to officially renege on a purchase contract has finally broken the ice.
Garuda Indonesia announced it is canceling a nearly $5 billion order for 49 Max 8 jets, saying in a statement to wire services that “its business would be damaged due to customer alarm over the crashes.”
The crash of an Ethiopian Airlines Max 8 jet on March 10, which followed a similar incident involving a Lion Air flight just several months earlier, prompted outrage over Boeing’s withholding of information from pilots and hesitance to provide important software updates.
It was reported earlier this week that US authorities had already opened a criminal investigation into the certification process of the Max 8 before the second crash. Preliminary evidence has revealed Boeing was well aware of potential problems stemming from the plane’s design and flight automation software intended to compensate but calculated that additional safety precautions were not worth the time and investment.
The fallout fueled immediate speculation that airlines would drop the popular Max model, but Garuda is the first to do so publicly.
The 737 Max accounts for around a third of Boeing’s sales, with nearly 5,000 units on backorder. The delivery of all orders has been paused as flight regulators decide whether or when to lift a grounding order.
As airlines decide whether to cancel orders of the jet, Boeing will also have to contend with compensation for disrupted service of its customers.