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Ryanair places major Boeing order after jet price spat

by jcp
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Ryanair places major Boeing order after jet price spat

By Valerie Insinna, Padraic Halpin and Tim Hepher

WASHINGTON/DUBLIN (Reuters) -Ireland’s Ryanair agreed a multibillion-dollar deal for as many as 300 Boeing jets on Tuesday, burying the hatchet after an 18-month public feud over prices upset one of aviation’s closest partnerships.

Europe’s largest low-cost carrier said it was placing a firm order for 150 of the largest version of Boeing’s narrow-body jet family, known as the 737 MAX 10, with options for another 150.

Ryanair Chief Executive Michael O’Leary flew to Washington to celebrate the deal with a long-time supplier but continued to needle Boeing over jet prices – while acknowledging that Ryanair had been forced to pay more per seat than in previous deals.

“In our view it will never be cheap enough and in Boeing’s view it is always far too cheap,” O’Leary told a news conference on the deal, which he said would support high-tech jobs.

Boeing Chief Executive Dave Calhoun countered that no premium was high enough for Boeing’s best-selling jet in a jovial back-and-forth capping months of tough negotiations.

Ryanair said the order would allow it to almost double its traffic to 300 million passengers per year by March 2034 from the 168 million flown to the end of March this year. It currently expects to fly 225 million passengers a year by 2026.

On Monday, Reuters first reported that Ryanair was close to a major deal for Boeing jets. Earlier on Tuesday, sources said the deal could involve up to 200-300 jets including options.

The deal delivers a boost to the largest version of Boeing’s 737 MAX, a best-selling series whose deliveries have been depressed by a two-year safety crisis and post-COVID disruption.

Ryanair has long expressed interest in the 230-seat MAX 10 variant, which has yet to be certified. But O’Leary had pledged not to overpay for the 30 extra seats, telling Reuters in March he could also order more of the existing 200-seat 737 MAX 8200.

DELAYS

O’Leary last year broke off talks with Boeing and issued a barrage of public comments over pricing and delays in the arrival of previously ordered jets.

On Tuesday, however, he said Boeing had made significant progress in catching up on delays. Boeing last month said some 737 MAX deliveries had been halted due to a supplier problem.

Ryanair exclusively uses Boeing 737s for its mainline fleet and is one of Boeing’s largest customers with more than 600 planes in its fleet or on order, according to its website.

The Dublin-based carrier is seen as keen to play up its low cost base, which underpins its signature brand of low fares, while Boeing is keen not to be seen as caving in on jet prices.

Ryanair said the deal was worth $40 billion at list prices, though experts noted that this included options, which are not booked as orders, and typical discounts for firm orders run at more than 50%. The MAX 10 has a list price of $135 million.

While Boeing’s relief at winning the order was tangible, industry sources said Ryanair had lost some advantage in negotiations and early slots as carriers including United Airlines placed significant orders for the MAX 10.

The planes will be delivered from 2027 to 2033.

“Ryanair operates a 737 fleet and is pretty locked in,” with Airbus sold out for years and China years away from being able to supply the West, Agency Partners analyst Nick Cunningham said.

(Additional reporting by Abhijith Ganapavaram, Conor Humphries and David ShepardsonWriting by Tim HepherEditing by Louise Heavens and Mark Potter)