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SQ789
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Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 2:20 am

Into the response of the crash of Lion Air last October in Indonesia and recently Ethiopian Airlines. Garuda is likely to cancel the remaining orders of it's 737 MAX according CEO Ari Askhara. This comes several days after competitor Lion Air plans to switch to Airbus from Boeing. All the source are in Indonesian below.

https://www.cnnindonesia.com/ekonomi/20 ... -737-max-8

http://www.tribunnews.com/bisnis/2019/0 ... ng-737-max
If it's not Boeing, I'm not going!
 
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ikolkyo
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 2:25 am

More like an excuse to do so. They took delivery of 1 aircraft a year ago and deferred to the rest to 2020 and beyond.

edit: Could also be a negotiation tactic, they were talking about converting 36 aircraft to MAX 10 just a month ago.
Last edited by ikolkyo on Fri Mar 15, 2019 2:30 am, edited 1 time in total.
 
downdata
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 2:37 am

Unlike Lion air which is threatening to convert, Garuda is looking for a way out for new aircrafts they never needed.
 
wedgetail737
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 3:05 am

downdata wrote:
Unlike Lion air which is threatening to convert, Garuda is looking for a way out for new aircrafts they never needed.


Isn't Garuda broke anyway?
 
gia777
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 3:08 am

Garuda is doing fine. They are not canceling the MAX order because of the recent accident. They are going to make some changes on their order for commercial purposes. The biggest problem in Indonesia now is high fare tickets on all domestic routes causing a drop in passengers load factor. They rose a lot compare to last year and idk whats going on
Cheers,

GIA777 :coffee:
 
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eta unknown
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 3:32 am

Off topic I see GA are talking about a Moscow route in June and a LAX route (via ICN this time) later in year. But like a lot if things GA states publicly, I bet it won't happen.
 
TheEuphorian
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 3:40 am

gia777 wrote:
Garuda is doing fine. They are not canceling the MAX order because of the recent accident. They are going to make some changes on their order for commercial purposes. The biggest problem in Indonesia now is high fare tickets on all domestic routes causing a drop in passengers load factor. They rose a lot compare to last year and idk whats going on

Thats because in Indonesia, there is a duopoly between GA(including SJ/IN/QG) and JT(including IW/ID), making the fares become extortionate for the average Indonesian, and QZ isn't big enough to fight back.
 
mandala499
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 7:35 am

gia777 wrote:
Garuda is doing fine. They are not canceling the MAX order because of the recent accident. They are going to make some changes on their order for commercial purposes. The biggest problem in Indonesia now is high fare tickets on all domestic routes causing a drop in passengers load factor. They rose a lot compare to last year and idk whats going on

GIA isn't fine. It's stuck between a rock and a hard place. However, given their commercial situation and grossly excessive capacity with the new "artificially high" prices, they don't need the Max anytime soon and being stuck with 1 Max isn't cost effective either.

TheEuphorian wrote:
Thats because in Indonesia, there is a duopoly between GA(including SJ/IN/QG) and JT(including IW/ID), making the fares become extortionate for the average Indonesian, and QZ isn't big enough to fight back.

Slightly off topic, but this should give everyone else, the competitive scene at the moment...
https://skift.com/2019/03/13/did-airasi ... air-fares/
When losing situational awareness, pray Cumulus Granitus isn't nearby !
 
gia777
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 7:57 am

SUB - CGK fares is locked at IDR1.604.000 or US$ 113 for one way by GA, that is absurd for 1 hour flying time for Indonesian standard economic of living. IDK about you mandala,..but I don't agree with this fare.
Cheers,

GIA777 :coffee:
 
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FrenchPotatoEye
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 8:27 am

The whole world knows of Indonesia's shocking aviation safety record.

Good riddance if they cancel orders - someone else can either get their MAX-737 earlier or the slots open up for new customers.

Indonesia/Garooda are not the be-all and end-all.
 
mandala499
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 8:35 am

gia777 wrote:
SUB - CGK fares is locked at IDR1.604.000 or US$ 113 for one way by GA, that is absurd for 1 hour flying time for Indonesian standard economic of living. IDK about you mandala,..but I don't agree with this fare.

My message is simple, we vote with our wallets.
GA's policy of applying a flat full Y fare is honestly sickening, but it's their choice... however allegation of cartelism surfacing since January, is a cause for great concern.
I got a feeling that the other airlines are "held hostage to follow suit or face problems", which seems to go along with the allegations of cartelism.

The days of getting last minute IDR 450.000 for CGKSUB is gone... and the minimum and maximum price mechanism set by the government isn't helping...
I hope common sense will prevail in the end, and proper yield management will prevail with bargain prices for flights a few months away, reasonable prices for flights departing 2-4 weeks ahead, and expensive last minute prices...

In the mean time, I'm reducing my flights, and taking the train when it's relatively convenient... or fly internationally which is cheaper...
When losing situational awareness, pray Cumulus Granitus isn't nearby !
 
bhxalex
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 10:39 am

gia777 wrote:
Garuda is doing fine. They are not canceling the MAX order because of the recent accident. They are going to make some changes on their order for commercial purposes. The biggest problem in Indonesia now is high fare tickets on all domestic routes causing a drop in passengers load factor. They rose a lot compare to last year and idk whats going on


Having flown extensively around Indonesia in January this year, i did notice on routes such as CGK-JOG, AirAsia, Lion Air, Batik Air, Citilink and Sriwijaya Air were all around $20-40 one way, 3 weeks out. Whereas Garuda was around $100. (Some are subsidiaries of GA, but the point of very high fares stands). Even CGK-SIN-JOG on SQ/Silkair was a few dollars cheaper than GA direct.

Likewise on CGK to BKK/DMK, Garuda were 3x more expensive than AirAsia.

I understand Garuda have a different business model to the LCC's, but there's very little premium demand in Indonesia, so the price disparity was quite a shock.

Even Malaysian attempt to compete on some routes at KUL against AirAsia. If CGK was able to properly expand, Garuda would be finished. Their only saving grace is that CGK is full, so they can't get battered too harder by LCC's... yet.
 
77H
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 11:21 am

gia777 wrote:
SUB - CGK fares is locked at IDR1.604.000 or US$ 113 for one way by GA, that is absurd for 1 hour flying time for Indonesian standard economic of living. IDK about you mandala,..but I don't agree with this fare.


You think $113 is bad, come fly interisland in Hawaii. I’ve seen tickets as high as $200 for a one way HNL-OGG which is about 25 minutes air time.

77H
 
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Polot
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 11:26 am

77H wrote:
gia777 wrote:
SUB - CGK fares is locked at IDR1.604.000 or US$ 113 for one way by GA, that is absurd for 1 hour flying time for Indonesian standard economic of living. IDK about you mandala,..but I don't agree with this fare.


You think $113 is bad, come fly interisland in Hawaii. I’ve seen tickets as high as $200 for a one way HNL-OGG which is about 25 minutes air time.

77H

As he noted though, you need to look at standards of living/average wages too. $113 is a lot more money for your typical Indonesian than $200 is for your typical Hawaiian (not to say $200 isn’t a lot of money for a flight like that).
 
sibibom
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 11:27 am

FrenchPotatoEye wrote:
The whole world knows of Indonesia's shocking aviation safety record.

Good riddance if they cancel orders - someone else can either get their MAX-737 earlier or the slots open up for new customers.

Indonesia/Garooda are not the be-all and end-all.


Totally, let Garuda go, and even 200 from Lion Air too. Then there are 200 from Vietjet, 25 from Malaysian. Flyadeal too. Jet Airways' 225 is suspect for completely other reasons

Kenyan is too scared and is considering Neo instead of Max (they operate NG right now), ET is in talks with Airbus for an order. which talks of Neo besides more A350.

There are so many waiting to buy them at a premium.....oh wait!

10% of MAX orders are on shaky ground and we don't we have a report of what the cause is. Indonesia is on course to be 4th largest Aviation market within the next 2 decades. Shutting them off is like an early Christmas bonus for Airbus considering they can potentially charge a premium for these new orders in the near term.

Every customer is important, however small they are. Especially when the ability to command a premium is almost zero at least for a while.
 
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FrenchPotatoEye
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 11:44 am

Both OEMs have iffy orders frankly.

So what if some are lost? The likes of Lionair is probably a loss-making or zero profit deal and flyadeal isn't even firm.

AirAsia is one of the biggest iffy Airbus buyers. Lion is one too.
 
moa999
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 11:56 am

Polot wrote:
you need to look at standards of living/average wages too. $113 is a lot more money for your typical Indonesian .


Cost of operating a flight though is mostly in USD.
Aircraft purchase/rental
Fuel.

Yes pilot/FA/Mgmt costs might be a little less in Indonesia, but it doesn't substantially change the overall operating cost.

If the govt puts an upper limit on fares, then the cheap fares will naturally disappear so they can hit a minimum average
 
moa999
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 11:57 am

quote="Polot"]
you need to look at standards of living/average wages too. $113 is a lot more money for your typical Indonesian .[/quote]

Cost of operating a flight though is mostly in USD.
Aircraft purchase/rental
Fuel.

Yes pilot/FA/Mgmt costs might be a little less in Indonesia, but it doesn't substantially change the overall operating cost.

If the govt puts an upper limit on fares, then the cheap fares will naturally disappear so they can hit a minimum average
 
Exeiowa
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 11:59 am

Airlines have probably over ordered, if companies see an opening to reduce their order books with out penalty they will take it. At the end of the day all that means is Boeing has less in back log. Blaming an airline as not being worthy reminds me of my kids arguing.
 
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Polot
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 12:03 pm

moa999 wrote:
Polot wrote:
you need to look at standards of living/average wages too. $113 is a lot more money for your typical Indonesian .


Cost of operating a flight though is mostly in USD.
Aircraft purchase/rental
Fuel.

Yes pilot/FA/Mgmt costs might be a little less in Indonesia, but it doesn't substantially change the overall operating cost.

If the govt puts an upper limit on fares, then the cheap fares will naturally disappear so they can hit a minimum average

I’m talking about what potential passengers can afford to buy, not operating costs.
 
masA380
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 12:05 pm

FrenchPotatoEye wrote:
Both OEMs have iffy orders frankly.

So what if some are lost? The likes of Lionair is probably a loss-making or zero profit deal and flyadeal isn't even firm.

AirAsia is one of the biggest iffy Airbus buyers. Lion is one too.

Thankfully, AirAsia operates an all Airbus fleet. One less thing to worry about. FYI, Boeing did approach them for 787-10 (you should probably know better). And I wonder if B would approach them if they’re indeed ‘iffy’ customer.
 
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FrenchPotatoEye
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 12:07 pm

masA380 wrote:
FrenchPotatoEye wrote:
Both OEMs have iffy orders frankly.

So what if some are lost? The likes of Lionair is probably a loss-making or zero profit deal and flyadeal isn't even firm.

AirAsia is one of the biggest iffy Airbus buyers. Lion is one too.

Thankfully, AirAsia operates an all Airbus fleet. One less thing to worry about. FYI, Boeing did approach them for 787-10 (you should probably know better). And I wonder if B would approach them if they’re indeed ‘iffy’ customer.


I don't know the details around that. Sorry.
 
LJ
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 12:12 pm

FrenchPotatoEye wrote:
So what if some are lost? .


I doubt your view is shared by Boeing and its shareholders.

FrenchPotatoEye wrote:
Good riddance if they cancel orders - someone else can either get their MAX-737 earlier or the slots open up for new customers.


The question is: Do they want their 737s earlier. Airlines don't need all the new planes at once. They already have aircraft which needs to be depreciated till they can be replaced and an airline must be able to pay for the aircraft (and thus needs financing in place). Moreover, it takes more effort to get a new sale than retaining a current one.
 
SKAirbus
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 12:27 pm

Why is there so much aggression? Airliners.net has becoming a pretty nasty place in the last year or so - no ability to have rational sane arguments. Just hysterical A vs B hyperbole. It's an insult to our collective intelligence.

- Firstly, I understand why some airlines are concerned. Two accidents in quick succession. We don't have a report into the latest accident but reputational damage has already been done and the MAX has received a lot of negative global attention. Passengers don't usually care what type of plane they are on but I'm pretty sure many will do so at least in the immediate future.

- Just because an airline makes a potential fleet decision that doesn't favour your favourite manufacturer, doesn't mean you have a right to use implied xenophobia to dismiss an entire country's aviation sector.

- As noted above, every customer is a valid customer.
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zakuivcustom
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 12:35 pm

SKAirbus wrote:
Why is there so much aggression? Airliners.net has becoming a pretty nasty place in the last year or so - no ability to have rational sane arguments. Just hysterical A vs B hyperbole. It's an insult to our collective intelligence.


To be fair, A vs. B hyperbole had been around since the days where this forum still had paid membership. :white:

For OP's topic - I agree with other posters that GA more or less is using the accident as an excuse to get out of the MAX order. Or else they wouldn't just take 1 (out of 50) and defer the rest to begin with. Sadly, GA (like all the state-own carriers in the region i.e. TG or MH or further aboard, AI or UL) will always be somewhat of a financial mess with all the political meddlings.

P.S. For Lion Air, what should Boeing do anyway? Tell them to f**k themselves since they're a "nobody"? Boeing for the most part dominates the Indonesian market for NB (Citilink and Indonesia AirAsia are the two exceptions), and Boeing is not about to just give that up just b/c JT is suppose to be "iffy".
 
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FrenchPotatoEye
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 12:36 pm

LJ wrote:
FrenchPotatoEye wrote:
So what if some are lost? .


I doubt your view is shared by Boeing and its shareholders.


Well, they let it proceed, so they can't complain if it's then lost...
 
moa999
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 2:20 pm

I’m talking about what potential passengers can afford to buy, not operating costs.


Yes. But airlines aren't in the business of losing money.
If fuel prices go up and governments cap the maximum fares, there aren't many other levers left
 
KICT
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 3:12 pm

Good. Maybe they can invest in their country's airport infrastructure instead? I'd recommend starting with installing an ILS or two and investing runway pavement and overrun barriers.
 
P1aneMad
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 3:21 pm

Polot wrote:
moa999 wrote:
Polot wrote:
you need to look at standards of living/average wages too. $113 is a lot more money for your typical Indonesian .


Cost of operating a flight though is mostly in USD.
Aircraft purchase/rental
Fuel.

Yes pilot/FA/Mgmt costs might be a little less in Indonesia, but it doesn't substantially change the overall operating cost.

If the govt puts an upper limit on fares, then the cheap fares will naturally disappear so they can hit a minimum average

I’m talking about what potential passengers can afford to buy, not operating costs.

The financial situation of the average Indonesian is irrelevant to the cost structure of Garuda or to any other airline of the World.
The cost of an aircraft, of its fuel, of insurance, parts and maintenance, overflight rights etc. is in real and not PPP Dollars/Euros.
Boeing or Airbus do not sell their aircraft cheaper to airlines from poor countries and more expensive to airlines from reach countries.

So if the average Indonesian can not afford a plane ticket can either travel less often by plane, take the bus or the boat.
 
Sooner787
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 3:49 pm

FrenchPotatoEye wrote:
Both OEMs have iffy orders frankly.

So what if some are lost? The likes of Lionair is probably a loss-making or zero profit deal and flyadeal isn't even firm.

AirAsia is one of the biggest iffy Airbus buyers. Lion is one too.


If some airlines want to cancel their Max orders & go with Airbus,
The only real option right now would be the A220-100 & -300 family.

The A32X line is sold out fort the forseeable future...
 
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Momo1435
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 4:33 pm

It's mentioned in other Indonesian articles that the CEO also said that they were looking at converting part of the MAX order into a 787 order before the 2nd crash. And that these crashes give them a better position in the negotiations. That doesn't really sound like they want out of the deal because of the crashes and an order change might also not be all negative for Boeing in this case.
 
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FrenchPotatoEye
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 5:13 pm

Momo1435 wrote:
It's mentioned in other Indonesian articles that the CEO also said that they were looking at converting part of the MAX order into a 787 order before the 2nd crash. And that these crashes give them a better position in the negotiations. That doesn't really sound like they want out of the deal because of the crashes and an order change might also not be all negative for Boeing in this case.


I think Airbus will certainly be favored - despite there superb backlog of neo's, they will welcome new orders.

Who knows, Airbus may try to upwell with the a3330-neo too and stave off 797 desires.
 
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keesje
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Re: Garuda may cancel remaining orders of 737 MAX

Fri Mar 15, 2019 5:44 pm

I think this is no coincidence.

The Indonesian authorities probably have an opinion on how the Lion Air crash was handled, communicated by Boeing and the US authorities.

Trying to smartly buy time, divert attention, public opinion towards LionAir Maintenance track record instead of MCAS logic, redundancy & training. And not saying sorry.

https://www.forbes.com/sites/jeremybogaisky/2018/11/28/lion-air-crash-report-raises-questions-about-maintenance-and-pilots-actions/#5152856245c4
"Never mistake motion for action." Ernest Hemingway
 
gia777
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Re: Garuda may cancel remaining orders of 737 MAX

Sat Mar 16, 2019 3:57 am

I just seriously hope 777-x series won't have MCAS issue or any hidden system,,,it's very scary. 787 has mcas?
Cheers,

GIA777 :coffee:
 
AvFanNJ
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Re: Garuda may cancel remaining orders of 737 MAX

Sat Mar 16, 2019 4:58 am

gia777 wrote:
I just seriously hope 777-x series won't have MCAS issue or any hidden system,,,it's very scary. 787 has mcas?

No, 777X and 787 are fly by wire airplanes and don't need anything like MCAS. The 737 MAX lacks full fly by wire although it has fly by wire spoilers that the 737 NG lacked. Without full FBW, MCAS was a needed enhancement of the flight control system to help counter increased pitch up at higher angles of attack due to the changed aerodynamics resulting from the larger engines' higher and more forward position on the wing.
 
juliuswong
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Re: Garuda may cancel remaining orders of 737 MAX

Sat Mar 16, 2019 1:23 pm

Things to note, the narrow body in South East Asia is currently dominated by Airbus. Only Boeing users now are quiet small. MI, GA, MH, JT, DD, UB and soon VJ. GA (50 pcs) and JT (246 pcs) form bulk of Max order now, it would not be very wise for Boeing to antagonise GA and JT now. MH is also reviewing their order (25pcs) and might not survive latest government culling. DD is in red sinkhole with only 6 Max8 on order, leaving you with only VJ (200 pcs), UB (6 pcs) and MI (37 pcs).

There are smaller NG operators now like SJ, IN but these airlines has no Max on order.
- Life is a journey, travel it well -
 
MIflyer12
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Re: Garuda may cancel remaining orders of 737 MAX

Sat Mar 16, 2019 2:23 pm

The topic made it into Reuters, with this headline reflecting the opportunism by the carriers:

'Airlines with buyers' remorse may use Boeing 737 MAX ban to revise orders'

https://www.reuters.com/article/us-ethi ... QW2P8?il=0

The grounding of Boeing’s global 737 MAX fleet has brought headaches for airlines that need to find alternative aircraft to fly in their place, but it has given some carriers a welcome opportunity to re-evaluate orders for the plane.

...

For airlines that over-ordered the latest version of Boeing’s 737 workhorse, the grounding could be a good excuse to delay or cancel purchases, saving cash on the balance sheet, analysts said.

“These unfortunate developments could give airlines that have potentially over-ordered an opportunity to review their requirements and fleet strategy,” CAPA Centre for Aviation Chief Analyst Brendan Sobie said.


The topic isn't lost carrier confidence in Boeing, nor lost consumer confidence in MAX -- it's an opportunity to correct an over-ordering mistake.

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