Ryanair ends talks with Boeing on a major new order for 737 jets due to a disagreement over pricing
“Negotiations with Boeing for a MAX10 order have ended without any agreement on pricing,” Ryanair said.
Ryanair and Boeing had been in discussions about a large follow on order for Boeing MAX10 aircraft over the past 10 months.
However, last week it became clear that the pricing gap between the partners could not be closed and accordingly, both sides have agreed to waste no more time on these negotiations, it added.
Ryanair is already the largest European customer for the 737 MAX, with 210 firm orders of the 197-seat MAX 8-200 model. These deliveries will see Ryanair’s fleet grow to over 600 aircraft.
In July it said it might do a deal before the end of the year for a significant order of the 230-seat MAX 10.
A large order from Ryanair would have provided a major boost to US planemaker Boeing and its MAX, which was grounded for 20 months, up to last November, after two fatal crashes.
But last week, Ryanair group chief executive Michael O’Leary poured cold water on the chances of a quick deal, saying he would be surprised if agreement was reached before next year.
Michael O’Leary said today that the airline was disappointed that it could not reach agreement with Boeing on the new MAX10 order.
“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,” Mr O’Leary 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,” he said.
“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 added.
The breakdown in negotiations – at least for now – means there will be no quick deal that would have provided a major vote of confidence in the MAX, but Ryanair did not say it was planning to hold talks with rival Airbus, the only realistic alternative supplier.
Michael O’Leary, one of Boeing’s most loyal customers, in recent years has repeatedly played down the prospect of a deal with Airbus due to the manufacturer’s heavy backlog of orders.
Britain’s Jet2 last week closed a deal for 36 A321 neo aircraft worth about $4.9 billion. Delta in August added 30 A321neo narrowbody aircraft to its order book with Airbus.
Industry analysts noted Boeing has nonetheless had a series of major orders for the MAX in recent months including 150 of the 737 MAX-10 from US carrier United Airlines.
Some analysts say the public standoff 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 around 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.
Meanwhile, Boeing has pledged discipline over jet prices after Ryanair’s decision to walk away from negotiations over a major jetliner purchase.
“Ryanair is a long-standing partner. We value their business and are committed to supporting them,” a Boeing spokesperson said.
“At the same time, we continue to be disciplined and make decisions that make sense for our customers and our company,” the company said.
Ryanair shares were higher in Dublin trade today.