Ryanair Ends Aircraft Order Talks With Boeing Over Price Dispute

DUBLIN – Boeing faces deadlock with one of its biggest customers after Ireland’s Ryanair says it has ended negotiations to buy tens of billions of dollars worth 737 MAX 10 in due to price differences.

The rare move to go public with the big-ticket negotiations comes after months of wrangling that had already delayed a deal for the larger version of the 737 MAX when Ryanair ordered a smaller model again in December.

A major new order from Ryanair would give the US aircraft manufacturer a boost as it restores confidence in the MAX, which was on hold for 20 months until November after two fatal crashes. It would also speed up an interim recovery of the industry after the COVID-19 pandemic.

The largest low-cost carrier in Europe is already the largest MAX customer in the region with 210 MAX 8-200 with 197 seats on order. It suspended a new order worth a potential $ 33 billion at list prices for up to 250 of the 230 MAX 10 seats.

Even after steep industry-wide discounts, such a deal would still be worth well over $ 10 billion, analysts estimate.

But last week Ryanair Group CEO Michael O’Leary threw cold water on the chances of a quick deal, saying he would be surprised if a deal were reached this year.

On Monday, he said the talks had collapsed.

“We are disappointed that we were unable to come to an agreement,” O’Leary said. “However, Boeing has a more optimistic view of aircraft prices than we do, and we have a disciplined record of not paying high prices for aircraft.”

Boeing is also committed to discipline.

“Ryanair has been a long-standing partner. We appreciate their business and are committed to supporting them,” said a Boeing spokesperson. “At the same time, we continue to be disciplined and make decisions that make sense to our customers and our business. “

Ryanair shares rose 1.8%. U.S. markets, where Boeing is listed, were closed for Labor Day.

While Ryanair has theoretically ended the talks, analysts have said public pressure will draw Boeing to the table with an improved offer as the aircraft manufacturer juggles the fallout from the MAX crisis, uncertainty over COVID-19 and industrial problems.

However, Boeing seems to believe that the market is finally moving in its direction after winning a series of orders including 150 MAX 10 from United Airlines.

Industry experts say Ryanair is one of the two mainstays of the budget alongside Southwest which can insist on Boeing’s best prices.

The spread of COVID-19 variants and public acceptance of the MAX will help determine if prices still have room to come down or if Ryanair, one of the toughest negotiators in the industry, has missed the bottom of the market for the largest MAX model.

“MAX values ​​have increased very slightly as inventory decreases,” said Rob Morris, senior consultant at Ascend by Cirium. “We hear less about some of the low prices.”

The MAX 10 has yet to enter service, but estimated values ​​for the slightly smaller MAX 9 have recently increased by 2%, although they are still 9-10% below pre-crisis levels. MAX, he said.

Despite the split with Boeing, O’Leary has repeatedly downplayed the prospect of a dramatic defection to compete with Airbus due to a long waitlist for its much-sold A321neo. The two companies have had strained relations in the past.

On Monday, however, O’Leary pointedly pointed out that other Boeing customers have made deals with Airbus.

Britain’s Jet2 struck a deal last week for 36 A321 neos worth around $ 4.9 billion.

Delta, which sources from both suppliers, added A321neo to its backlog in August 30 from Airbus.

Still, industry sources have said that Airbus may be hesitant to dilute what it sees as a price advantage for its A321neo by getting drawn into a price war against Ryanair that few expect. he wins.

“It is likely that Boeing and Ryanair will eventually strike a deal,” said an industry veteran.

Airbus declined to comment.