How safe is Lion Air

How Lion Air and Boeing are trying to fob off the bereaved in Indonesia

Two Boeing 737 Max aircraft crashes in Ethiopia and Indonesia claimed 346 lives. Now Boeing wants to pay the relatives $ 50 million. This does not diminish the anger of the Indonesian bereaved.

Anton Sahadi found out about the disappearance of the Lion Air plane on flight JT 610 via Twitter. Then came breaking news from Metro TV, followed by the first hints on Instagram. His two cousins ​​Ravi Andrian and Riyan Aryandi sat on board the accident machine, which disappeared from the radar screen a few minutes after take-off in Jakarta at dawn on October 29, 2018 and killed 189 people. The body of Ravi was quickly found by divers, but there is still no trace of Riyan to this day.

The dilemma of the loved ones

The dilemma of the bereaved in Indonesia is evident from the fate of the two 24-year-old victims. Ravi's parents reluctantly accepted the locked up offer from Lion Air due to lack of money and have now received 1.3 billion rupiah (Rp.) Or the equivalent of US $ 93,000 as compensation. It is said that around 50 families have signed a corresponding agreement with the airline. It is an estimate because neither Lion Air nor the lawyers involved in Indonesia provide reliable information.

At least 60 families, including Riyan's parents, rejected this offer. In the words of Anton Sahadi, who represents dozens of relatives, for good reason: the amount corresponds to the bare minimum that survivors have been entitled to under Indonesian law since 2011; the corresponding Article 3 of Regulation 77/2011 stipulates that airlines must pay relatives 1.25 million cents for each fatality. The page-long document from Lion Air also contained countless legal clauses, the legality of which is disputed. From now on, the signatories undertook to waive any claim against Lion Air, Boeing, their suppliers or insurance companies. Any publication of the document or the inspection of third parties is prohibited.

The rapidly growing Lion Air, whose safety deficiencies have become legendary since it was founded twenty years ago, is - as is Ethiopian Airlines, whose 737-8-Max plane crashed on March 10, 2019 - embroiled in legal disputes with Boeing. But in one matter, Anton suspects, the low-cost airline and Boeing, whose partnership includes 387 aircraft, have joined forces: The surviving dependents in Indonesia are to be fobbed off with the minimum amount and at the same time put into a legal corset.

Boeing with no interest in the US jurisdiction

In contrast, Riyan Aryandi's father has been in the United States for weeks. Its parents are among the five dozen families who, instead of urgent compensation under Indonesian law, are taking class action lawsuits overseas directly against Boeing. Such complaints are also pending from 55 families of the 157 victims on board Ethiopian Airlines ET302. In these, the aircraft manufacturer is accused, among other things, of knowing the software errors in the anti-stall system "MCAS" (Maneuvering Characteristics Augmentation System), which presumably led to the crash of the two Boeing aircraft. Boeing has neither initiated adequate corrections nor sufficiently pointed out modifications in the new 737 model.

The Chairman and CEO of Boeing, Dennis Muilenburg, recently pointed out that MCAS was "obviously" switched on, and expressed apologies and sympathy; he has also admitted omissions. However, these are not actual confessions of guilt. Legally, the lawsuits of the Indonesian families are on insecure feet anyway: Since - in contrast to the crash of the Ethiopian Airlines plane - none of the victims had US citizenship and there are hardly any other reasons for a place of jurisdiction in the USA, the case could soon be referred back to Indonesia.

It would be an unpleasant development for the bereaved here: two crashes with new machines of the same type could trigger completely different compensations and compensation for pain and suffering. Lion Air, by far the largest airline in Southeast Asia in terms of fleet, has become a mockery due to numerous incidents in this country. But the main culprit for the disaster in the Java Sea is now more likely to be attributed to Boeing among the population. If US judges turn the case back to Indonesia, the inevitable question is whether the lives of the victims of JT610 are worth less than those on board the ET302.

Pocket money for Lion Air, but failed IPO

In this case, the ball would be back with Lion Air. The company is known for sticking to the strict minimum and writhing out of responsibility, says Anton Sahadi. The initial promise to erect a memorial with the names of the victims in Tanjung Pakis near the site of the crash has not yet been followed up. He himself, who excelled as the spokesman for the bereaved, had been offered several times by an anonymous caller a hush money of Rp 2 billion. Lion Air could easily recover the amount of almost $ 20 million for relatives in Indonesia - about a fifth of the price of a passenger plane - by renegotiating the 187 pending orders for 737 Maxs previously ordered; The Lion Air Group, which includes seven airlines, including Batik Air, Malindo Air and Thai Lion Air, has ordered aircraft worth $ 21 billion from Boeing to date.

The crash of the aircraft with flight number JT610 made a big dash through the bill in a different way: Lion Air was already planning to go public in mid-2018. It would have been the perfect way to offload a huge debt burden from a company that has grown too quickly and whose reputation is based not on quality but on austerity and mass processing. You don't want to talk about it at the moment, said the group's CEO, Edward Sirait. The company did not respond to media inquiries either. The climate for Lion Air and the interest of investors were actually better.

A transparent PR campaign

While negotiations with lawyers for relatives of the victims of both crashes in the United States are in full swing, Boeing is also trying to limit the damage. Due to production delays, loss of image and cancellations of orders for the 737 Max model in question, the costs resulting from the debacle are likely to run into billions; Lion Air alone has 187 orders open for the 737 Max, which the company's chairman, Rusdi Kirana, recently questioned. A few days ago, the Saudi low-cost airline Flyadeal canceled 50 orders, which corresponds to an order volume of over $ 5.5 billion.

It is still unclear how high the compensation payments will one day be. On July 3rd, Boeing announced the support of a fund with $ 100 million "over several years". This should help relatives in need with the involvement of local authorities and aid organizations. Because the initiative (which supposedly remains completely independent of the legal discussions) then smelled too much of a PR campaign, Boeing specified on July 16 that $ 50 million should be paid out directly to the relatives. Anton Sahadi and the Indonesian plaintiffs in the US are unimpressed. At $ 144,000, the amount per victim would be quite a bit, but not enormously higher than the minimum statutory amount prescribed by Indonesian law.

737 Max debacle burdens Boeing's balance sheet with $ 4.9 billion

(dpa) The crisis surrounding the 737 Max series, which was banned from flying after two crashes, screwed up the US aviation giant Boeing's balance sheet. In the second quarter there will be an additional charge of 4.9 billion dollars (4.4 billion euros) after taxes, the company announced on Thursday after the US market closed. This means that the Airbus competitor is likely to get deep into the red.

According to Boeing, the money will be used for potential compensation from airlines that are affected by operational disruptions and delivery delays due to the failure of the 737 Max. The group wants to book the extra costs in full in the second quarter, but possible compensations to airlines are only to take place over several years and in various forms.

In addition, the aircraft manufacturer announced that production costs for the entire 737 program are likely to have increased by approximately $ 1.7 billion in the second quarter. This is mainly due to the fact that the production rate has to be reduced longer than planned. These increased costs would continue to weigh on profit margins.

However, this did not scare investors. On the contrary: Boeings shares even turned up around two percent in after-hours trading. Apparently, the market participants had feared even more severe burdens. In any case, stockbrokers have so far looked at the 737 Max crisis quite calmly. Over the year, the share price has even increased by almost twelve percent.

Boeing is under massive pressure after two identical 737 Max aircraft crashes in Indonesia and Ethiopia, in which a total of 346 people died in October and March. Take-off bans were imposed worldwide for the affected aircraft type - up until then the manufacturer's best-selling model. It is currently unclear whether and when Boeing's 737-Max series will be allowed to take off again.

Recently, the supervisors had identified further problems, which could mean that a readmission could drag on much longer. Boeing is suspected of having rushed the aircraft onto the market and neglecting safety. The group denies this, but has admitted mishaps. Investigation reports indicated faulty control software was the cause of the crash.

The US airlines with 737 Max planes - Southwest, American and United Airlines - had recently all announced that they would be removing the crisis jets from their flight plans by early November. This means that hundreds of flights are canceled every day and the airlines incur additional costs. Another problem are orders for the 737 Max, which cannot be delivered due to the flight ban.