Ryanair owes Boeing more than €5bn for delayed 737 Max planes

Obligations relate to orders for 135 of aircraft grounded by regulators on safety concerns

Grounded Boeing 737 Max aircraft at Boeing Field in Seattle, Washington, in July 2019. File photograph: Lindsey Wasson/Reuters

Grounded Boeing 737 Max aircraft at Boeing Field in Seattle, Washington, in July 2019. File photograph: Lindsey Wasson/Reuters

 

Ryanair owes US aircraft maker Boeing €5.1 billion for ordered 737 Max planes, the delivery of which has been delayed since last year.

US and EU regulators grounded the Boeing 737 Max in March 2019 on safety fears sparked by two crashes before any of the new models were delivered to the Irish airline group.

Ryanair’s annual return to US stock market watchdog, the Securities and Exchange Commission (SEC), show its obligations to Boeing for firm orders of the Max, over five years from March 2020, are €5.116 billion.

That figure covers 135 of the craft for which Ryanair has placed firm orders. The group has options to buy up to 75 more Max 737s under agreements dating back to 2014.

Ryanair points out that the figure is based on Boeing’s list price of $103 million, net of basic credits and advance payments, while taking price rises over the five-year period into account.

The Irish group notes that it is entitled to further credits from Boeing on the basis that it is a long-standing customer of the US giant, is a launch customer for the Max and is willing to buy up to 210 of the craft.

The returns add that this “will reduce the average amount payable per aircraft”.

Suspended advances

The contract obliges Ryanair to pay periodic advances to Boeing, but the airline suspended these pending regulators’ confirmation that the Max can return to service.

The figure given in its SEC filings is based on Boeing delivering 48 of the craft in Ryanair’s current financial year, which ends on March 31st, 2021, followed by 45 in the 2022 financial year and 42 thereafter.

Ryanair has said that it hopes that the European Union Aviation Safety Agency and the US Federal Aviation Authority will approve the Max later this year, which should allow deliveries to begin in 2021.

However, its returns say that Ryanair can offer “no assurances that its estimation and timelines of aircraft purchase commitments” under the Boeing contract will not change.

The Max is the latest version of the Boeing 737 flown by Ryanair and used throughout the globe on short and medium length flights.

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