Boeing Inc. (BA - Get Report) may lose a $6 billion order for its 737 MAX 8 after Indonesia's national airline moved to cancel or amend a previous agreement for the controversial aircraft as the fallout from two fatal crashes deepens for the world's biggest planemaker.
Garuda Indonesia CEO Ari Askhara said Friday that Boeing customers had lost trust in the 737 MAX line, according to remarks from an interview with Reuters, while the CFO said the carrier was looking to cancel or amend a 49-plane order valued at $6 billion. If confirmed, the Garuda move would be the first formal cancellation of MAX 8 deliveries and could trigger broader concerns for the back order log of nearly 5,000 units with a list value of around $600 billion.
Boeing shares were marked 1.93% lower Friday to change hands at 365.54 each, a move that extends the stock's slide since the fatal ET 302 crash, which killed all 157 passengers on board on March 10, to past 12%. That's wiped more than $28 billion in market value from the world's biggest planemaker.
Boeing continues to be pressured by headlines suggesting lawmakers, federal investigators and the Department of Justice are lining up to question executives over the two horrific crashes of its 737 MAX planes that killed nearly 350 passengers and raised serious safety concerns for the flagship aircraft.
The Federal Aviation Administration is also under scrutiny for its role in approving Boeing's Maneuvering Characteristics Augmentation System, or MCAS, in March 2017. The software has been cited as the potential link between the October crash of a Lion Air flight in Indonesia and this month's Ethiopian Airlines disaster in east Africa.
Lawmakers on the Senate's subcommittee on aviation and space are set to question FAA officials on March 27, and said Wednesday they would invite Boeing executives to face similar queries later in the spring.
"In light of the recent tragedy in Ethiopia and the subsequent grounding of the Boeing 737 Max aircraft, this hearing will examine challenges to the state of commercial aviation safety, including any specific concerns highlighted by recent accidents," the panel, which is led by Republican Senator Ted Cruz, said Wednesday, adding it would like, "in the near future, to hear from industry stakeholders that would include Boeing, other aviation manufacturers, airline pilots, and other stakeholders."
A further report, from the Seattle Times, suggests the Federal Bureau of Investigation is also looking into the MAX software certification process. A Wall Street Journal report earlier this week said the U.S. Department of Transportation is looking into the FAA's handing on the MCAS certification.
The FAA said last week that "new evidence" collected at the ET302 crash site compelled it to ground all "Boeing 737 MAX aircraft operated by U.S. airlines or in U.S. territory", reversing an earlier statement on the plane's safety.
"The grounding will remain in effect pending further investigation, including examination of information from the aircraft's flight data recorders and cockpit voice recorders," the agency added. "An FAA team is in Ethiopia assisting the NTSB as parties to the investigation of the Flight 302 accident. The agency will continue to investigate."