Ryanair places major Boeing order after jet price spat

Ireland’s Ryanair (RYA.I) sealed a multibillion-dollar deal for as many as 300 Boeing (BA.N) jets on Tuesday, burying the hatchet after an 18-month public feud over prices upset one of aviation’s closest partnerships.

Europe’s biggest 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.

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

Along with a massive Air India order inked in February for almost 500 jets, it signifies what Ryanair CEO Michael O’Leary termed “a dramatic rebound in orders” for Boeing and European rival Airbus (AIR.PA) as travel recovers from the pandemic.

It also marks a long-awaited truce between Boeing and Ryanair after O’Leary broke off talks last year and issued a barrage of criticism over pricing and delays in the arrival of previously ordered jets.

O’Leary flew to Washington to celebrate the deal with a long-time supplier but continued to needle Boeing over jet prices, acknowledging that Ryanair had been forced to pay more per seat than in previous deals while Boeing successfully pressed Ryanair to increase its order by about 100 planes.

“I was expecting we would get the same pricing as we had the last time. I’ve had to eat some humble pie on that,” O’Leary told Reuters in an interview, adding he was still pleased with the final price, which neither side disclosed.

“Boeing wanted us to step up the scale and size of the order even to get the discounts that we [got].”

Boeing Chief Executive Dave Calhoun countered during a press conference that no premium was high enough for the jet, in a jovial back-and-forth.

Despite the concessions on price, O’Leary said the new jets would be “transformational” for Ryanair, allowing 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.

“We’ve had to accept a modestly higher price,” O’Leary said. However, if Ryanair maintains its 94 per cent load capacity on flights aboard the larger MAX 10 jets, “we can fill almost all of these additional 30 seats, and those additional 30 seats will pay for the aircraft in their entirety”.

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.

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.

DELAYS

While O’Leary had previously criticized Boeing for 737 MAX delivery delays caused by a supplier problem, the Ryanair CEO said on Tuesday he expects almost all of the 51 jets originally slated to be delivered in April to be passed over to Ryanair by the end of July.

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, 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 per cent. The MAX 10 has a list price of $135 million.

The MAX 10s will be delivered from 2027 to 2033.

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.

O’Leary rebuffed that notion, even as he acknowledged that Ryanair would have had to wait until 2028 or 2029 for its first deliveries if negotiations had drawn out longer.

One person familiar with the deal said Ryanair could not afford to wait much longer as Indian airlines scoop up hundreds of narrow-body jets, threatening to squeeze Ryanair out of the market for in-demand large models for the rest of the decade.

“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.