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Lion Air leader talks about scrapping Boeing jet orders




The founder of the Indonesian low-cost boat Lion Air is "very upset" at Boeing for what he sees as an attempt to deflect the blame for the airline for October 29, which took 189 lives. He is talking privately about whether he should cancel any of the airline's major bookings for 737 MAX flights.

The founder of the Indonesian low-fare Lion Air is furious at Boeing for what he sees as an attempt to deduce the airline's blame for the October 29 crisis that took 189 lives and he privately talks about the possibility of cancellation of any of the the airline's big order for 737 MAX flights.

"He is very upset with Boeing," said an airline financier who knows Lion Air founder Rusdi Kirana well.

Kirana has had a relationship with Boeing over the past few years, saying both the financial man and the chief executive officer of an airline company. The excitement of awarding the blame for the crash has only made things worse. Kiran's speech about cutting Lion Air's 737 orders was first reported Monday by Reuters.

It may also be an appropriate moment to cut some of Lion Air's 1[ads1]88 unfilled MAX orders. Industry sources say it has been clear for a while that the airline has ordered more flights than it can handle.

Even last year, before the crash, according to two people with knowledge of the company's thinking, Lion Air discussed possible delays of aircraft deliveries.

"I do not know if Rusdi only uses this to influence Boeing," said Airline Leader CEO, who asked not to be identified to protect business relations.

Still, it's more at stake is your reputation. Kirana needs to defend the skills of its pilots and maintenance staff in order to maintain the trust of the airline and keep the passenger level up.

The finance said that Kirana believes that while there may have been a lack of Lion Air's part, the trigger for crashed software was in Boeing's flight control system.

Following the preliminary investigation report of the 737 MAX crash was issued last week, Boeing issued a long statement highlighting technical problems on the four planes before the deadly and the fact that on the plane the previous day the pilot probably handled what worked very similar inflight issues.

While these details point to possible airline maintenance or pilot failures, Boeing's statement made no announcement of the new aircraft control system that was introduced to MAX, which began to press the plane's nose down below the plane when an incorrect reading from a sensor suggested that the plane approached a stable. American airline leaders have complained that the existence of this new system was not revealed in training.

"Rusdi has the feeling that he is being manipulated by Boeing," said the finance minister.

Kirana founded Lion Air in 1999. Although he was a new aerospace actor who previously ran a travel agency, the ambition created his biggest airline in Southeast Asia and a big new customer for Boeing.

Although Kirana has conducted the daily control of Lion Air to Managing Director Edward Sirait and has gone on to a political role as Indonesia's ambassador to Malaysia, he is still a 50 percent owner of Lion Air Group, which includes sister airlines in Thailand and Malaysia as well as Indonesia. He is said to be responsible for big decisions.

Lion Air has already delivered almost 200 737s. And the Lion Group's awaited orders for MAX represent about 4 percent of the undisputed demand.

Lion also has 178 Airbus jets in order, all for the A320neo family who is a competitor of 737 MAX.

The airline finances, who asked not to be identified to protect their business relationship with Boeing, said Lion has made some prepay for most of these planes. It has put significant money only on jets to be delivered in the next couple of years. So for airplanes to be delivered beyond that, cancellation probably will not mean a big penalty.

Despite Lions big order numbers, Scott Hamilton, head of aviation consultant Leeham.net, Bainbridge Island, said he did not believe that cancellation of even a significant portion of the Lion Air booking book would be a major blow to Boeing.

With a reset of over 4,500 aircraft, the MAX program can afford to lose a few hundred orders.

"Silverfeeding for Boeing is that a Lion Air cancellation would mean less exposure to a dicey-airline airline," said Hamilton. "In addition, it would open up the delivery track for new orders in competition with the Airbus A320neo."

According to two sources, Lion Air last year was in financial difficulties and restructured leases and considered postponing some orders. Many in the industry believe Boeing helped get the airline, with the quid pro quo that Lion would upgrade 50 of its MAX orders to it biggest MAX 10 model, as it did in April this year.

Others in the industry besides Hamilton agree that Lion Air is overstretched.

"They struggle more than they can chew," says Adam Pilarski, an analyst with advice from Avitas. He notes that in the same region, VietJet and AirAsia also have major flight orders. As passenger traffic in Southeast Asia grows rapidly, it can not absorb all these aircraft.

Pilarski said that the accident worsened Lion s problem. "It can reduce passenger traffic, and it will affect the number of aircraft they need," he said.

The finance said that a reduction in the anticipated orders is likely to come even without a crash.

"I think Rusdi realizes that he has absorbed a lot of aircraft and does not have the equity he needs for capital expenditure in advance," he says. "If he grew at the right pace and had the right balance and needed the planes, we would not hear this . "

Landlord CEO believes that although the two sides are now sniper on each other, he expects back-stage negotiations, which may include postponing some orders and other financial enticements, eventually cooling down things.

" It will be some positioning before it gets very ugly, "he predicted.



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