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JAKARTA/OSLO (Reuters) – Indonesian airline Garuda plans to cancel a $6 billion order for Boeing 737 MAX jets, it said on Friday, saying some passengers would be frightened to board the plane after two fatal crashes, although analysts said the deal had long been in doubt.

The news came as another 737 MAX customer, Norwegian Air, played down the significance of a move by Boeing to make a previously optional cockpit warning light compulsory.

Norwegian said that, according to Boeing, the warning light would not have been able to prevent erroneous signals that Lion Air pilots received before their new 737 MAX plane crashed off Indonesia in October, killing 189 people.

Indonesia’s national carrier Garuda is the first airline to publicly announce plans to scrap an order since the world’s entire fleet of 737 MAX planes was grounded last week, following an Ethiopian Airlines crash that left 157 people dead.

“Many passengers told us they were afraid to get on a MAX 8,” Garuda CEO Ari Askhara told Reuters on Friday.

However, the airline had been reconsidering its order for 49 of the narrowbody jets prior to the Ethiopian crash, including potentially swapping some for widebody Boeing models.

Southeast Asia faces a glut of narrowbody aircraft like the 737 MAX and rival Airbus A320neo at a time of slowing global economic growth and high fuel costs.

“They have been re-looking at their fleet plan anyway so this is an opportunity to make some changes that otherwise may be difficult to do,” CAPA Center for Aviation Chief Analyst Brendan Sobie said.

Indonesia’s Lion Air has also said it might cancel 737 MAX aircraft, though industry sources say it is also struggling to absorb the number of planes on order.

Both crashes are still being investigated. But regulators have noted some similarities between the two, and attention has focused on whether pilots had the correct information about the “angle of attack” at which the wing slices through the air.

No direct link has been proven between the accidents.

RETROFITS
Boeing now plans to make compulsory a light to alert pilots when sensor readings of the angle of attack do not match – meaning at least one must be wrong -, according to two officials briefed on the matter.

Investigators suspect a faulty angle-of-attack reading led the doomed Lion Air jet’s computer to believe it had stalled, prompting the plane’s anti-stall system, called MCAS, repeatedly to push the plane’s nose down.

The Lion Air plane did not have the warning light installed because it was not compulsory. Ethiopian Airlines did not immediately comment on whether its crashed plane had the alert.

But the Ethiopian carrier, whose reputation along with Boeing’s is at stake, issued a statement on Friday emphasizing the modernity of its safety and training systems, with more than $500 million invested in infrastructure in the past five years.

The Ethiopian crash has set off one of the widest inquiries in aviation history and cast a shadow over the Boeing 737 MAX model intended to be a standard for decades.

Boeing did not comment on the plan to make the safety feature standard, but separately said it was moving quickly to make software changes and expected the upgrade to be approved by the U.S. Federal Aviation Administration (FAA) in coming weeks.

Chicago-based Boeing will also retrofit older planes with the cockpit warning light, the officials told Reuters.

Experts said it could take weeks or months to be done, and for regulators to review and approve the changes. Regulators in Europe and Canada have said they will conduct their own reviews of any new systems.

Norwegian said its 18 737 MAX jets did not have the cockpit warning light, but it would follow any recommendations made by Boeing and aviation regulations. The airline said last week it would seek compensation from Boeing for the cost of grounding its 737 MAX planes, which makes up 11 percent of its fleet.

Since the Ethiopian crash, Boeing shares have fallen 12 percent and $28 billion has been wiped off its market value.

Pressure has mounted on the company from U.S. legislators, who are also expected to question the FAA. The company faces a criminal investigation by the U.S. Justice Department as well.

Several lawsuits have already been filed on behalf of victims of the Lion Air crash referring to the Ethiopian accident. Boeing declined to comment on the lawsuits.

SEOUL/WASHINGTON (Reuters) – North Korea on Friday pulled out of a liaison office with the South, in a major setback for Seoul, just hours after the United States imposed the first new sanctions on the North since the second U.S.-North Korea summit broke down last month.

North Korea said it was quitting the joint liaison office set up in September in the border city of Kaesong after a historic summit between leader Kim Jong Un and South Korea’s President Moon Jae-in early last year.

“The North’s side pulled out after conveying to us that they are doing so on the instructions from a higher level, during a liaison officials’ contact this morning,” South Korea’s Vice Unification Minister Chun Hae-sung told a briefing.

South Korea regrets the decision and urged a swift normalisation of the arrangement, Chun said, adding the South would continue to staff the office, set up as a regular channel of communication to ease hostility between the rivals, which technically remain at war.

The move came after the United States on Thursday blacklisted two Chinese shipping companies it says helped North Korea evade sanctions over its nuclear program and cited 67 vessels it said engaged in illicit trade helping the North.

It was the first such step since a second meeting between President Donald Trump and North Korean leader Kim Jong Un in Hanoi broke down over conflicting demands by the North for relief from sanctions and from the United States for Pyongyang to give up its nuclear weapons.

The North’s withdrawal from the office was another blow to Moon, who has seen his standing as a mediator between Pyongyang and Washington deteriorate and divisions grow within his government over how to break the impasse.

Moon’s administration had touted the office as a major feat resulting from his own summit with Kim last year despite U.S. concerns about possible loosening of sanctions.

The South’s Chun said he would not directly link the North’s move to the failed Hanoi summit. But experts saw a pattern in the North lashing out against the South when its crucial strategic position with Washington is in jeopardy.

“The North sees its nuclear issue and ties with the United States as a matter of greater strategic importance, so when they try to assert its position, they sacrifice the ties with the South, which is considered inferior,” said Shin Beom-chul of the Asan Institute for Policy Studies in Seoul.

Moon’s office reacted by holding an urgent meeting, headed by his national security adviser, to discuss the withdrawal.

The won weakened about 0.4 percent against the dollar in non-deliverable forward (NDF) trade after the news.

NEW SANCTIONS
The U.S. Treasury Department identified two Chinese firms for new sanctions – Dalian Haibo International Freight Co Ltd and Liaoning Danxing International Forwarding Co Ltd – which had helped the North evade U.S. and international sanctions, it said.

It also cited 67 vessels for engaging in illicit transfers of refined petroleum with North Korean tankers or facilitating the export of the North’s coal.

Reuters was unable to locate contact details for either of the Chinese companies to seek comment.

The U.S. sanctions prohibit U.S. dealings with the designated companies and freezes any assets they have in the United States.

“The United States and our like-minded partners remain committed to achieving the final, fully verified denuclearization of North Korea and believe that the full implementation of North Korea-related U.N. Security Council resolutions is crucial to a successful outcome,” Treasury Secretary Steven Mnuchin said in a statement.

The latest sanctions showed there was some “leakage” in North Korea sanctions enforcement by China, but it was mostly abiding by U.N. resolutions, a senior U.S. official told reporters on condition of anonymity.

While declining to say whether Washington was trying to send a post-summit message to Pyongyang, the official said Trump “has made clear that the door is wide open to continuing the dialogue with North Korea.”

LIMBO
U.S.-North Korean engagement has appeared to be in limbo since the Feb. 27-28 summit, despite U.S. Secretary of State Mike Pompeo saying on March 4 he was hopeful he could send a team to North Korea “in the next couple of weeks.”

North Korea has warned it is considering suspending talks and may rethink a freeze on missile and nuclear tests, in place since 2017, unless Washington makes concessions.

Activity was detected at the North’s main rocket test facility around the time of the failed summit, fueling concern that Pyongyang may be about to resume weapons development to ratchet up pressure on Washington.

On Monday, two senior U.S. senators called for the Trump administration to correct a slowing pace of American sanctions designations on North Korea, saying such actions had seen a marked decline in the past year of U.S. diplomatic engagement with Pyongyang.

They pointed to a recent U.N. report that North Korea continued to defy U.N. sanctions with an increase in smuggling of petroleum products and coal and violation of bans on arms sales.

A U.N. sanctions panel said in the report Liaoning Danxing was suspected of illicitly shipping Mercedes-Benz limousines to North Korea. Last July, the Netherlands seized a cargo of Belarusian vodka, also banned as luxury goods, en route to North Korea via the company, it said.

SHANGHAI (Reuters) – Smartphone retailers in China say it’s a tough sell of late with consumers reluctant to upgrade, put off by chill economic winds.

Even so domestic brands led by Huawei have made big strides, wooing consumers with top-notch hardware and innovative features as they move upmarket in the $500-$800 price range. The result: a loss of share in a key segment for Apple Inc and fresh price cuts for iPhones by Chinese retailers.

“Of those people who are upgrading, there are many switching from Apple to Chinese brands but very few switching from Chinese brands to Apple,” said Jiang Ning, who manages a Xiaomi store in the northern province of Shandong.

Huawei Technologies Co Ltd, Xiaomi Corp, Oppo and Vivo once sought to grab share in the world’s biggest smartphone market with value-for-money devices, but consumer demand for better phones has prompted strategic rethinks.

“People are more attached to their phone than ever and have higher expectations for the function and experience it offers. The response has been constant upgrading of hardware specs,” Alen Wu, global vice president at Oppo, told Reuters.

He Fan, CEO of Huishoubao which buys and resells used phones, said he has seen a consumer shift to Huawei from Apple, driven by the Chinese love of selfies and emphasis on camera quality. Huawei has had a tie-up with German camera maker Leica since 2016.

“Huawei’s cameras have become noticeably better than Apple’s in that they suit the tastes of Chinese consumers more,” he said.

Compared to dual-cameras common in most smartphones, Huawei’s P20 Pro device boasts three rear-facing cameras, with the additional one improving zoom capabilities.

It is one of several new devices in its P20 and Mate 20 lines, which helped Huawei’s share of the $500-$800 segment in China surge to 26.6 percent last year from 8.8 percent, data from research firm Counterpoint shows.

Apple, by contrast, saw its share of the segment tumble to 54.6 percent from 81.2 percent, also hurt by its decision to move even further upmarket with the iPhone X series.

“Most Chinese smartphone buyers are not ready to shell out beyond $1,000 for a phone,” said Neil Shah, research director at Counterpoint. “This left a gap in the below-$800 segment, which Chinese vendors grabbed with both hands.”

Shipments of phones priced above $600 in China grew 10 percent in 2018, data from research firm Canalys shows. By contrast, the overall market shrunk 14 percent, marking a second year of contraction.

OVERSEAS GAINS
The weaker cachet for Apple in China was underscored this month when several major retailers simultaneously cut iPhone prices for a second time this year.

A 64GB iPhone 8 sold at Suning.com Co Ltd now costs 3,899 yuan ($580), roughly 25 percent less than it did in December. That’s also lower than its $599 price tag in the United States, where iPhones typically cost less to buy than in China. Most iPhone models through to the iPhone 8 series have seen prices in China cut, albeit not equally.

In earnings too, it seems to be a tale of divergent fortunes. Apple’s October-December revenue from the Greater China region fell by about a quarter from a year earlier. Greater China currently accounts for 15.6 percent of its overall revenue.

Huawei, the world’s No. 2 smartphone maker, has estimated revenue for 2018 rose 21 percent, which analysts attribute in large part to robust smartphone sales.

More broadly, fewer sales for Apple means fewer customers for its App Store and media streaming services. The shift to higher-end phones by Chinese brands has also meant greater inroads in overseas markets.

Huawei’s shipments in Europe jumped 55 percent in the latest quarter and it now has 23.6 percent market share, according to Canalys. That’s not far behind Samsung Electronics and Apple which saw small declines in shipments.

OPPO, VIVO
If Huawei is taking the lion’s share of turf that Apple once had in China, Oppo and Vivo – brands owned by electronics hardware conglomerate BBK – are the newest threats.

In June, Vivo launched the Nex which starts from 3,898 yuan ($610) and in July, Oppo launched the Find X, priced at 4,999 yuan ($755).

The models mark the first time the brands have priced a phone above $600, a sharp departure from their roots selling $300-$500 models to young consumers in second-tier cities.

The devices came with features unavailable in the iPhone, including under-the-glass fingerprint sensors and “notchless” displays, both of which increase the size of usable screen.

Xiaomi too is going upmarket, announcing in January it would split off its low-budget Redmi range of phones into a sub-brand. In doing so, it is taking a leaf out of Huawei’s book which has for years sold cheaper devices under the Honor brand, helping differentiate its products.

Redmi will target international markets and e-commerce sales, while the flagship Xiaomi brand will target China and offline retail markets, company founder Lei Jun told reporters.

Last month, Xiaomi unveiled the Mi 9, its latest flagship device with a price tag of 2,999 yuan ($450). But the company also said it might be the last time a Xiaomi flagship phone would be priced under 3,000 yuan.

“Xiaomi’s flagship series phones were once always set at 1,999 yuan,” said Lei. “This was a contributing factor to our rise, but it also became an obstacle to our growth,” he said.

BRUSSELS (Reuters) – European Union leaders have given Prime Minister Theresa May two weeks’ reprieve, until April 12, before Britain could lurch out of the EU if she fails to persuade MPs to back the withdrawal treaty she concluded with Brussels.

But after seven hours of summit brainstorming on Thursday, her 27 peers kept a host of options open, ramping up pressure on parliament to support May, giving Britain an outside chance of staying in for much longer – but also preparing to deflect blame for the chaos of any no-deal Brexit.

May had wanted to be able to delay Britain’s departure until June 30 to tie up legislative loose ends, and tried to reassure the EU that she could overturn two heavy defeats to clinch a last-gasp parliamentary ratification of her deal next week, so allowing a status-quo transition period to come into effect.

EU leaders had planned to endorse a shorter extension, to May 22, the eve of EU parliamentary elections, and leave any discussion of how to deal with May losing until next week. But diplomats said the prime minister singularly failed to reassure them she could win. Some sensed she did not believe it herself.

After May left the room, and with French President Emmanuel Macron pitching a surprise ultimatum for Britain to be out, deal or no deal, by May 7 — the eve of a summit on the EU’s post-Brexit future — the meeting plunged into frantic debate.

The outcome, with which May declared herself satisfied, was that the May 22 date will apply if parliament rallies behind her next week. If it does not, Britain will have until April 12 to offer a new plan or choose to quit without a treaty.

That date corresponds to the six weeks’ legal notice required for the EU election – which the Union would insist Britain hold on May 23 if it remains a member. If it does not hold the election, leaders said, the very last date Britain must leave would be June 30, before the new EU parliament convenes.

“OPTIONS REMAIN OPEN”
Until April 12, said summit chair Donald Tusk, “all options will remain open and the cliff-edge date will be delayed”.

“The UK government will still have a choice between a deal, no deal, a long extension or revoking Article 50 (the withdrawal notice),” he told a news conference.

If Britain decides by April 12 against holding the EU election, it could then leave the EU without a deal at any time up to May 22.

May said she would not cancel Brexit or seek a long delay that would mean asking people to vote in EU elections three years after voting to leave. She insisted she could secure a deal next week.

Many in London doubt that, not least after she offended many MPs on Wednesday by publicly blaming them for the deadlock. She tried to soften those remarks somewhat on Thursday.

“What this decision tonight does is show the clear choice that is open to MPs,” May said. “I think the choice is clear for people.”

But May’s stated belief in her strategy of a third vote did not communicate itself to the summit table.

“It did not go well,” said one EU official familiar with the talks. “They basically realised that she doesn’t really believe it herself. They don’t want to be seen to be forcing the Brits out now. But they are looking for ways to end the agony.”

While some brinkmanship from Brussels may be part of a strategy to bounce reluctant British legislators into backing May, there is also a growing impatience that efforts to avoid a messy Brexit are bogging the EU down when it has other priorities, from a weakening economy to rising nationalism.

“WE HAVE BOUGHT TWO WEEKS”
Macron has led the charge, calling for Britain, long a thorn in France’s plans for deeper European integration, to put up or shut up on Brexit. “We have come up with a response that protects our interests,” he said.

“It is up to the British to sort out their own internal contradictions. As for us, we don’t have any.”

May’s opponents at home range from hard-core Brexit supporters who say her deal gives the EU too much influence in Britain to others, inside and outside her own Conservative party, who would prefer to stay much closer to the EU or cancel Brexit.

Voicing the fears of business that a “no-deal” Brexit would hurt economies across the continent, German Chancellor Angela Merkel argued for caution, saying she would “work to the last minute” to avoid a disorderly departure.

By pushing the Brexit crunch toward Britain’s April 12 deadline to declare its decision on holding an EU election, EU diplomats said, the leaders also dodged potential blame if they had simply allowed Britain to crash out next Friday.

“That way, Merkel and the rest of the EU can avoid blame for forcing the British out,” one EU official said. “It will be up to the British themselves to say they are leaving with no deal.”

The basic problems of Brexit remain, however. Britain could still crash out without a transition, disrupting business and souring relations before the sides sit down to negotiate a trade pact and decide how to manage their politically sensitive land border in Ireland.

“Today was a long seven hours that bought us two weeks,” another EU diplomat said.

“It just lets us say with a clear conscience that we didn’t throw them under the bus on March 29 … But before April 12, we will face the very same questions as now.”