Garuda Indonesia has become the first airline to formally cancel orders for Boeing Co’s (NYSE:BA) 737 MAX 8 aircraft following two fatal crashes over the last six months, a move that could prompt other airlines like budget carrier Ryanair Holdings PLC (LON:RYA) to reassess their own orders.
The Irish airline currently has 110 orders for the MAX 200, a high-capacity version of the MAX 8, with options on 100 more to help grow its fleet to 585 by 2024 from the current fleet of 400.
Fellow London-listed airline TUI AG (LON:TUI), has already had to ground the 15 MAX 8 it has in its own fleet after the UK joined a list of countries suspending the use of the aircraft following a crash in Ethiopia on 10 March killing all on board.
A similar accident had occurred in Indonesia back in October, which also killed all of its passengers and crew.
The crashes caused a number of countries to ground the plane, with Boeing itself finally bowing to pressure and grounding its entire fleet of 371 MAX aircraft last week.
A spokesman for Garuda said passengers had “lost trust” in the MAX 8 aircraft and scrapped its order for 49 of the planes, a move the could cost Boeing more than US$4bn in lost income.
While the causes of the accidents have yet to be determined or linked, experts analysing the crashes have said that there were similarities between black box data found from the two aircraft.
No other airline has yet to formally cancel its orders of MAX aircraft, however carriers could be facing a massive headache if Boeing cannot appease regulators when it tries to solve the issues.
In early afternoon trading Friday, Ryanair shares were down 2.6% at €11.4p.
-- Adds detail on TUI fleet, updates share price --