Ryanair could pay $336m for extras on new Boeing Max

Irish airline to pay $1.6 million extra per aircraft for ‘buyer furnished’ equipment

Ryanair originally expected to have 20 737 Max aircraft before the end of its current financial year on March 31st, 2020, but may not begin receiving them until after Christmas. Photograph: Gerard Julien/AFP

Ryanair originally expected to have 20 737 Max aircraft before the end of its current financial year on March 31st, 2020, but may not begin receiving them until after Christmas. Photograph: Gerard Julien/AFP

 

Ryanair could pay up to $336 million for extras that it has asked the aircraft manufacturer Boeing to buy and install on 210 new 737 Max aircraft that the Irish carrier could buy from the US manufacturer.

The airline has ordered up to 210 Boeing 737 Max 200 aircraft from the US manufacturer. However, it now faces a delay in receiving the first of them as air travel regulators have grounded all such craft worldwide on safety concerns after a suspected software fault caused two 737 Maxs, flown by African and Asian airlines, to crash.

Documents filed by Ryanair with US stock market regulator the Securities and Exchange Commission (SEC) show that the airline group has agreed to pay $1.6 million extra per craft to Boeing for “buyer furnished” equipment that the Irish carrier has asked the manufacturer to buy and install on the aircraft.

This comes to a total of $336 million for all 210 craft or $216 million for the 135 737 Max 200 aircraft for which it has placed firm orders. Ryanair has an option to take the balance. Chief executive Michael O’Leary has several times indicated that it is likely to do so.

The SEC filings show that the list price of the Boeing 737 Max 200 is $102.5 million. The extra payment is on top of the basic price.

Discounts

However, the documents also state that the US aircraft manufacturer, and CFM, which makes the 737 Max 200 engines, are giving Ryanair a series of discounts on the deal.

“As a result, the effective price of each aircraft (the purchase price of the new aircraft net of discounts received from Boeing) will be significantly below the basic price mentioned above,” the airline’s filings state.

The Federal Aviation Authority in the US and the European Union Aviation Safety Agency have to be satisfied that Boeing has rectified the software fault blamed for the two crashes.

Ryanair originally expected to have 20 737 Max aircraft before the end of its current financial year on March 31st, 2020, but may not begin receiving them until after Christmas.

The Irish airline has slowed growth plans and decided to close or cut back on some of its bases as a result.

Mr O’Leary told the High Court last week that Ryanair feared that outgoing chief operations officer, Peter Bellew, could share information on its strategy for dealing with the Max delays with rival EasyJet, which he intends joining in January.

Ryanair has taken legal action to prevent Mr Bellew joining EasyJet as its chief operations officer next month as it says he signed an agreement saying he would not work for any competitor for one year after leaving the Irish group.

However, Mr Bellew says this agreement is null and void, denies breach of contract and says he will honour his confidentiality agreements with Ryanair. The case resumes in court today.