Ryanair ends talks with Boeing over Max 10 order

Airline says it became clear last week pricing gap between them could not be closed

Ryanair chief executive Michael O’Leary said the airline was ‘disappointed’. Photograph: Jonathan Brady/PA Wire

Ryanair chief executive Michael O’Leary said the airline was ‘disappointed’. Photograph: Jonathan Brady/PA Wire

 

Ryanair has ended negotiations with Boeing for a Max 10 order without any agreement on pricing, the airline said.

Ryanair will take delivery of more than 200 B737 “Gamechanger” aircraft by the end of 2025. These deliveries will see Ryanair’s fleet grow to more than 600 aircraft, capable of carrying in excess of 200 million customers per annum.

Ryanair and Boeing had been in discussions about a large follow-on order for the Boeing Max 10 aircraft over the past 10 months. However, Ryanair said on Monday that it became clear last week that the pricing gap between the partners could not be closed. Accordingly, both sides have agreed to “waste no more time” on these negotiations.

Ryanair chief executive Michael O’Leary said the airline was “disappointed” it could not reach agreement with the plane maker.

“However, Boeing have a more optimistic outlook on aircraft pricing than we do, and we have a disciplined track record of not paying high prices for aircraft,” he said.

“We have a more than sufficient order pipeline to allow us to grow strongly over the next five years with a Boeing 737 fleet, which will rise to over 600 aircraft and will enable Ryanair to capitalise on the extraordinary growth opportunities that are emerging all over Europe as the continent recovers from the Covid pandemic.

“We do not share Boeing’s optimistic pricing outlook, although this may explain why, in recent weeks, other large Boeing customers such as Delta and Jet2 have been placing new orders with Airbus, rather than Boeing,” he said.

Boeing’s other deals

A large order from Ryanair would provide a major boost to US plane maker Boeing and its Max, which was grounded for 20 months up to last November after two fatal crashes. It would also boost an industry grappling with the Covid-19 pandemic.

Britain’s Jet2 last week closed a deal for 36 A321neo aircraft worth about $4.9 billion. Delta in August added 30 A321neo narrow-body aircraft to its order book with Airbus. Delta has a mixed fleet of Airbus and Boeing jets.

Industry analysts noted that Boeing had nonetheless had a series of major orders for the Max in recent months, including 150 of the 737 Max-10 from American carrier United Airlines.

Some analysts say the public stand-off suggests that recent orders have given Boeing increased confidence to defend a red line on pricing as the Max regains commercial momentum. That contrasts with the pattern seen about six months ago when the Max was reported to be available at aggressive prices.

Ryanair, on the other hand, is gambling that its supplier will come to the table with a better offer as continued pressure from the pandemic adds to the fallout from the Max crisis.

How the tug of war over prices plays out will depend in part on the progress of efforts to contain Covid-19 in coming months. Despite the public row, “it is likely Boeing and Ryanair will eventually cut a deal,” a senior industry source said.