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Garuda May Become the First Airline to Cancel a Big 737 MAX Order After Grounding

March 14, 2019
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2 min read
MAX-9-WEATHERMAN
Garuda May Become the First Airline to Cancel a Big 737 MAX Order After Grounding
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With the Boeing 737 MAX grounded as a consequence of the Lion Air crash followed closely by the Ethiopian Airlines crash this past weekend, which was eerily similar, the airplane's maker is facing a grave risk: Customers may cancel their orders, possibly switching to the rival A320neo from Airbus.

The entire world has now grounded the aircraft, with no time frame on when those flight bans might be lifted.

With that type of uncertainty around an aircraft -- these were brand new planes having major accidents -- it's no surprise that airlines might be looking to cancel standing orders for the 737 MAX. Garuda, the flag carrier of Indonesia, has just said it may cancel its order for almost 50 of the planes, a move that could cost Boeing almost $5 billion in lost revenue.

While substantial, the Garuda order isn't even in the top 15 biggest 737 MAX orders. If other airlines with much larger outstanding orders decide to follow suit it could be a disaster for Boeing and its shareholders. The Boeing order book currently has orders for around 5,000 of the various 737 MAX models, with some of the largest of those orders coming from Southwest, American, Ryanair, Air Canada, China Southern and Norwegian Airlines. That order book is worth around $500 billion.

Boeing is working with regulators around the world to ensure passenger safety on board the MAX, and has already announced a software update for the aircraft. It's virtually certain that Boeing and regulators will eventually get the planes airborne again. How soon passengers might be willing to fly on a MAX might be a different story.

Featured image by Boeing

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  • Packed with credits foodies will enjoy
  • Solid welcome bonus

Cons

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  • Some may have trouble using Uber and other dining credits
  • You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
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  • Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
  • Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
  • Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
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  • $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
  • $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
  • Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
  • No Foreign Transaction Fees.
  • Annual Fee is $325.
  • Terms Apply.