The government's final report, released on 25 March 2008, concluded that the pilots lost control of the aircraft after they became preoccupied with troubleshooting the inertial navigation system and inadvertently disconnected the autopilot.

After numerous warnings by the authorities for Adam Air to implement safety regulations, that went unheeded, the airline was banned from flying by the Indonesian government in March 2008, and declared bankruptcy in June of the same year.

[11][12] On 1 January 2007, at 12:59 local time (05:59 UTC),[11]: 5  the plane departed from Juanda Airport, Surabaya, with 96 passengers (85 adults, 7 children and 4 infants), a 56 percent load factor,[13] and 6 crew on board.

[15] Weather in the region was stormy;[16] the Indonesian Bureau of Meteorology and Geophysics noted that the cloud tops were up to 30,000 feet (9,140 m) in height with an average wind speed of 30 knots (56 km/h) in the area.

Preoccupation with a malfunction of the Inertial Reference System (IRS) diverted both pilots’ attention from the flight instruments and allowed the increasing bank angle and descent to go unnoticed.

[24][27] The Indonesian sonar-equipped ship Pulau Rengat, capable of detecting underwater metallic objects later joined the team, equipped with a mini remote-controlled submarine.

[31] The search in the two areas was due to twin signals, each carrying different emergency locator transmitter frequencies, received by a Singaporean satellite and an Indonesian military air base.

The ship was operated by local mining firm PT Gema Tera Mustikawati and is usually used by oil and gas drilling companies to map the seabed.

[46] First Admiral Gatot Subyanto of the Indonesian Navy indicated three locations, between 3–6 km (1.9–3.7 mi; 1.6–3.2 nmi) apart, off Mamuju city on Sulawesi's western coast.

[47] A United States Navy oceanographic survey ship, Mary Sears, arrived in the area on 9 January with better equipment to help identify the objects, and on the same date a Canadian jet with five separate air crews, working in shifts, was sent to aid with aerial mapping of the suspected location.

[49] Extra underwater equipment, including a metal detector and an undersea camera, was sent from the United States, and arrived aboard the USNS Mary Sears on 17 January.

[41] On 3 February, Indonesian naval vessel KRI Tanjung Dalpele took affected families out to the crash site where a memorial service was held, which included throwing flowers into the sea.

Vice-president of Indonesia Jusuf Kalla went so far as to question the need to retrieve the black boxes at all, although experts said in response that the accident was of international significance as it could indicate a fault with the aircraft.

[62] Adam Air said that in its opinion, the black boxes should be recovered, describing the accident as being relevant on both national and international levels, but refused to pay, saying that was the responsibility of the government.

[64] Jim Hall, a former chairman of the US National Transportation Safety Board, said that it was essential the boxes be recovered quickly, as at that point their 30-day battery life was about to expire, which subsequently did happen.

Indonesia's National Transportation Safety Committee head Setio Rahardjo maintained that Adam Air should be charged with the retrieval costs.

[needs update] Eyewitnesses reported seeing a low-flying, unstable aircraft in the area from which the wreckage has been recovered but lost sight of it after hearing a loud bang.

The chief of the Indonesian Aircraft Technicians Association, Wahyu Supriantono, said that the plane was unlikely to have suffered an in-flight break up or explosion, as the debris field would have been larger, and as a result, wreckage would have been discovered earlier.

[11]: 54  The National Transportation Safety Committee (NTSC, or KNKT as per its Indonesian name) described the near eight-month wait for the recovery of the flight recorders as "unacceptable".

The tailplane suffered a structural failure 20 seconds prior to the end of the recording,[11]: 52  at which time the investigators concluded the aircraft was in a "critically unrecoverable state".

According to the Associated Press, one ex-Adam Air pilot stated that "every time you flew, you had to fight with the ground staff and the management about all the regulations you had to violate."

The highest number of complaints concerned the captain's side vertical speed indicator, which informs the air crew of the rate — in feet per minute at which the aircraft is ascending or descending.

[87] Adam Air was sued by Indonesian consumer and labour groups over the accident, for a total of one trillion rupiahs (US$100 million), to be paid to the families of the victims.

Adam Adhitya Suherman, founder of the family-run airline, has personally denied these accusations, and has said that maintenance consumes "up to 40 percent of our total operational costs".

[98] In March 2007, the Indonesian government announced that Adam Air was one of fifteen airlines that would have their licences revoked within three months unless they could improve their safety standards.

[104] As a direct result, the US Embassy in Jakarta issued a warning to all American citizens flying in or out of Indonesia to avoid using Indonesian airlines, and instead use international carriers with better safety reputations.

[107] Budhi Mulyawan Suyitno, Director-general of civil aviation at the Indonesian transport ministry, responded by saying that he felt Indonesia had made the improvements required by the EU.

[112][113] The recording, which had been publicly distributed through chain e-mails, begins with what is believed by some to be a conversation between pilot Refi Agustian Widodo and co-pilot Yoga Susanto before the crash.

Immediately thereafter, as the aircraft begins its final dive, the shotgun-like sounds of engine compressor surges and the overspeed "clacker" can be heard, along with two background voices screaming in terror and shouting out the Takbir.

Towards the end of the recording, there is a dramatic increase in wind noise as well as two loud bangs, the second greater than the first, consistent with structural failure of the aircraft.