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The investigation into the crash of Lion Air Flight 610 is a big issue, not only for the rapidly expanding budget carrier, but also for
Boeing
Co.
, which counts the airline as one of the biggest buyers of the 737 Max 8 aircraft type involved in the accident.
The plane crashed into the Java Sea on Monday shortly after takeoff from Jakarta. Indonesian authorities believe that the 189 people on board are dead.
Lion Air is a major customer of Max 8 and other variants of the Boeing 737 jet, as well as its rival A320 single-aisle aircraft and CFM International, the joint venture of General Electric Co.
Saffron
HER
SAF -1.69%
that makes Leap engines for both companies.
Boeing shares fell 6.6% after Monday 's crash, their biggest one – day drop since February 2016. Other companies with major activities in the sector defense have seen a similar decline, fearing a reduced budget from the Pentagon.
Boeing said it provides "technical assistance at the request and under the direction of government authorities who investigated the accident". The investigation is in its infancy and the authorities have given no indication that a failure of the equipment would have led to the accident.
CFM has stated that it is prepared to provide any assistance required by Lion Air, the Indonesian Committee on Transportation and Transportation Safety and the US National Transportation Safety Board.
US aviation regulators will also closely follow the investigation, which is part of the Federal Aviation Administration's efforts to streamline certification procedures for new aircraft. . An NTSB spokesman said the agency would send experts to Indonesia to participate in the investigation. The extent of the NTSB's cooperation will depend on the Indonesian authorities, the spokesman said.
The US airlines are the main buyers of Boeing's 737 Max 8.
American Airlines Group
Inc.
took deliveries of 15 with 85 more on order. A spokesman said that American would monitor the evolution of Lion Air.
Southwest Airlines
Co.
, had 28 of the 737 Max 8 at September 30 and orders for 227 others. A spokesman said the fleet was still in operation and the carrier would monitor the results.
Boeing has ordered more than 4,500 devices on the 737 Max in four different models and has delivered more than 200. Analysts estimate that these 737 accounts would account for up to 40% of Boeing's profits.
Boeing announced the 737 Max in 2011 after abandoning plans for a brand new aircraft designed to counter updates made by Airbus to its family of competing A320 aircraft. Both manufacturers have equipped their most popular aircraft with more fuel-efficient engines and fuselage designs than existing jet aircraft.
The revised 737 made its maiden flight in January 2016. Boeing delivered the first Max ahead of schedule at a Lion Air unit in Malaysia in May 2017.
Boeing said the engines of this new aircraft and improved aerodynamics could reduce fuel consumption by at least 14 percent over previous models, making it particularly attractive for high-growth, low-cost carriers. . The Max 8 variant of the 737 also has a larger seating capacity than previous models. It can accommodate up to 210 passengers, compared with 189 on the 737-800.
Lion Air is one of the biggest customers of the new aircraft. The Indonesian carrier has ordered 201 new 737s in 2011, alongside 29 of the existing version, as part of a transaction valued at $ 22 billion before the usual discounts in connection with such large sales. This makes Lion Air Boeing the seventh largest commercial customer by value, according to Wolfe Research. Lion Air also has nearly $ 21 billion of orders outstanding from Airbus, before reductions.
CFM began developing the Leap engines used on the 737 Max ten years ago to replace the widely used CFM56. Another version of the Leap engine is being used by his rival Airbus on his A320neo single-aisle aircraft. The Chinese C919, still in development, also uses a version of the engine.
The Leap engine is responsible for much of the improved fuel economy of the 737 Max. The engine uses composite fan blades that are lighter and more efficient than previous models.
CFM is behind on engine deliveries to Airbus and Boeing. Last week, the leaders of Safran and Boeing said the problem should be resolved by the end of the year.
The accident occurred 10 months after the pilot's fatigue and flight crew errors that caused a collision between another Lion Air flight and a Batik Air airliner near Surabaya, Indonesia. Batik Air is a separate unit of Lion Air's parent company.
According to the Indonesian official report on the January 6 incident, the co-pilot of the Batik Air aircraft failed to comply with the altitude restrictions after the air traffic controllers ordered the two aircraft to position themselves near the ground. The error triggered emergency collision alerts in cockpits and ground radars, and the Lion Air jet took evasive action. The report indicated that the aircraft were within 600 feet of each other vertically while passing approximately two miles laterally.
-Andy Pasztor contributed to this article.
Write to Andrew Tangel at [email protected] and Robert Wall at [email protected]
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