The fallout from the tragic Lion Air and Ethiopian Airlines accidents continues apace for Boeing, following the grounding of the Max 8 fleet. Whilst the US Federal Aviation Authority announced yesterday that Boeing is developing a service bulletin for the installation of new flight computer software, there has been no indication to date as to when this will be issued.
Garuda Indonesia has sought to cancel its order of 49 Max 8 aircraft, the first airline reported to do so, based, it says, on passengers' loss of confidence in the aircraft. Several other airlines are considering their own orders. Boeing has a US $600 billion plus order book for the Max 8.
Garuda Indonesia wrote, if press reports are to be believed, to Boeing on 14 March asking to cancel its order, although Boeing's response to that request has not been reported. Whether Garuda Indonesia, and other airlines who have the Max 8 on order, can, as a matter of law, cancel those orders depends on the terms of their order contracts with Boeing. An express term dealing with the current situation, or a "passenger loss of confidence", the reason cited by Garuda, is unlikely, but airlines may find assistance from more general provisions on cancellation/termination, delay, compliance with regulations etc. Any customer faced with a similar situation, where post-order events or changes in circumstances make continuance with an order unattractive, should consider their position, both contractually and commercially, as soon as possible and, where appropriate, seek advice and assistance on the options that might be available to them.
Lindsey is a partner in Freeths dispute management and avoidance team, specialising in complex cross-border disputes, international and domestic arbitration, aviation, commercial and finance disputes. In addition to disputes work, Lindsey uses her expertise to assist clients with contractual drafting, interpretation, enforcement, termination, renegotiation and amendment, ongoing contract management and risk avoidance.
Indonesia’s Garuda seeks to cancel order of 49 Boeing 737 Max 8s Airline says passengers have lost confidence in the aircraft following 2 fatal crashes