Lion Air CEO says it may cancel Boeing 737 MAX orders

A Lion Air Boeing 737-800 plane prepares to land at the Sukarno-Hatta airport in Tangerang on the outskirts of Jakarta. (Reuters)
Updated 06 December 2018
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Lion Air CEO says it may cancel Boeing 737 MAX orders

  • Lion Air is considering canceling orders for Boeing Co. 737 MAX jets following a crash that killed 189 people in October
  • Boeing declined to comment on contractual matters but industry sources say aerospace companies rarely leave room for unilateral cancelations

JAKARTA: Indonesia’s Lion Air is considering canceling orders for Boeing Co. 737 MAX jets following a crash that killed 189 people in October but has not yet made a decision, said the airline’s CEO Edward Sirait.

Sirait told a briefing that Lion Air was examining the legality of canceling orders but had not yet communicated with the manufacturer about the prospect.

The airline has 190 Boeing jets worth $22 billion at list prices waiting to be delivered, on top of 197 already taken, making it one of the largest US export customers.

Lion Air was reported to be reviewing Boeing airplane purchases and had not ruled out canceling orders as relations worsen in a spat over responsibility for the crash, according to sources.

Any cancelation of orders would need to be approved by the airline’s co-founders and co-owners, Rusdi Kirana and his brother Kusnan Kirana.

 

Rusdi Kirana ordered a review of airline purchases in response to Boeing’s statement last week focusing attention on piloting and maintenance topics related to the crash.

Boeing declined to comment on contractual matters but industry sources say aerospace companies rarely leave room for unilateral cancelations except in exceptional circumstances.

Bankers and some analysts say Lion Air and Southeast Asian rivals over-expanded and would be comfortable with fewer orders.

Lion Air, as a private company, does not publicly disclose information about its financial position.

Loss-making national carrier Garuda Indonesia has reported pressure from higher oil prices and a weaker currency.

FASTFACTS

Lion Air has 190 Boeing jets worth $22 billion at list prices waiting to be delivered, on top of 197 already taken, making it one of the largest US export customers.


Oil prices rise on Libyan export interruption, but markets remain weak

Updated 22 min 14 sec ago
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Oil prices rise on Libyan export interruption, but markets remain weak

  • The rise came after crude prices dropped by 3 percent the session before amid ongoing weakness in global stock markets and concerns that slowing oil demand-growth could erode supply cuts
  • Crude futures have lost around a third of their value since early October amid the financial market slump and an emerging oil supply overhang

SINGAPORE: Oil prices edged up on Tuesday after Libya’s National Oil Company declared force majeure on exports from the El Sharara oilfield, which was seized at the weekend by a local militia group.
Despite that, overall sentiment on oil prices remained weak amid worries over global stock markets and doubts that planned supply cuts led by producer club OPEC will be enough to rein in oversupply.
International Brent crude oil futures were at $60.19 per barrel at 0336 GMT, up 19 cents, or 0.3 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were at $51.16 per barrel, up 16 cents, or 0.3 percent.
Libya’s National Oil Company (NOC) late on Monday declared force majeure on exports from the El Sharara oilfield, the country’s biggest, which was seized at the weekend by a militia group.
NOC said the shutdown would result in a production loss of 315,000 barrels per day (bpd), and an additional loss of 73,000 bpd at the El Feel oilfield.
The rise came after crude prices dropped by 3 percent the session before amid ongoing weakness in global stock markets and concerns that slowing oil demand-growth could erode supply cuts announced last week by the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers including Russia.
Crude futures have lost around a third of their value since early October amid the financial market slump and an emerging oil supply overhang.
In a show of no confidence, money managers cut their bullish wagers on crude to the lowest in more than two years in the week ending Dec. 4, the US Commodity Futures Trading Commission (CFTC) said on Monday.
The financial speculator group cut its combined futures and options position in New York and London by 25,619 contracts to 144,775 during the period. That is the lowest level since Sept. 20, 2016.
In physical markets, Kuwait and Iran this week both reduced their January crude oil supply prices to Asia
“There remains a lot of uncertainty if the production cut is thick enough to make a significant dent in global supply,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.
“The general risk-off tone in global markets and the stronger dollar ... are contributing to the selling pressure.”
The OPEC-led group of oil producers last Friday announced a supply cut of 1.2 million barrels per day (bpd) in crude oil supply from January, measured against October 2018 output levels.