PARIS, May 9 (Reuters) – 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 conflict in which the price of one threatens. of the closest aviation partnership.
Europe’s largest low-cost carrier said it is 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 larger-than-expected 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 delays.
Along with Air India’s massive order inserted in February for nearly 500 jets, it underscores what Ryanair CEO Michael O’Leary called “a dramatic rebound in orders” for Boeing and European rivals. Airbus (AIR.PA) as travel recovers from the pandemic.
It also marked a long-awaited truce after O’Leary broke off talks with Boeing last year and unleashed a barrage of criticism over pricing and delivery delays for previously ordered jets.
O’Leary, whose sharp wit and bold demands have made the former accountant one of Europe’s most prominent business leaders, flew to Washington to celebrate the deal but offered an unusually coy summary. after months of difficult negotiations.
“I was hoping we would get the same price as last time. I had to eat some humble pie there,” O’Leary told Reuters, adding that he was still pleased with the final price, which neither side disclosed . .
Industry sources said Ryanair may have paid more than it initially bargained for after holding out for a better deal, but one O’Leary said was at pains to avoid bashing Boeing, which became eager for the deal not to be painted as overly generous.
Boeing shares rose more than 1% in midday trading. Ryanair closed up 3.6%.
“I was told to say there was a competitive discount … although I didn’t think (it) was particularly competitive,” O’Leary joked to reporters, adding that the order was up by about 100 plane to help bring the two side by side.
Boeing Chief Executive Dave Calhoun argued that there was not enough of a premium for the jet as the two companies patched up their differences in a relaxed press conference.
Despite the price concessions, O’Leary said the new jets would allow Ryanair to almost double its annual traffic to 300 million passengers by March 2034 from the 168 million it flew by the end of March this year.
Some of that will come at the expense of rival carriers.
O’LEARY WILL ACCEPT MODERATELY HIGH PRICES
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.
On Monday, Reuters first reported that Ryanair was close to a major deal with Boeing. Earlier on Tuesday, sources said the final deal could involve up to 200-300 jets with options.
Ryanair has long expressed interest in the 230-seat MAX 10, which faces runaway sales of the competing Airbus A321neo used by Ryanair rivals such as Wizz Air ( WIZZ.L ) and which has yet to be certified. But O’Leary promised not to overpay for the 30 extra seats.
Ryanair said the deal was worth $40 billion at list prices, although experts noted that it included options, which were not booked as orders, and standard discounts for firm orders were running at more than 50%.
“We had to accept a pretty high price,” O’Leary said. However, if Ryanair maintains its 94% or nearly full load on flights with the larger MAX 10 jet, the extra 30 seats “will pay for the aircraft in their entirety,” he said on Tuesday.
Industry sources said any price increase could be partially offset by compensation for delays, making it difficult to gauge who would agree to the majority.
O’Leary also frequently blasted Boeing for industrial problems. On Tuesday, however, he praised the catch-up effort and said he expected nearly all of the 51 previously ordered jets earmarked for April to arrive by the end of July.
The newly ordered MAX 10s will be delivered from 2027 to 2033.
While Boeing’s relief at winning the order was palpable, analysts said Ryanair had lost some of its advantage in negotiations and early slots as carriers including United Airlines placed significant orders for the MAX 10. .
O’Leary dismissed this but Ryanair admitted it would have to wait until 2028-29 if negotiations took longer.
A person familiar with the deal said Ryanair could not afford to wait much longer as Indian airlines snapped up hundreds of narrow-body jets, threatening to squeeze Ryanair out of the market for the in-demand larger models for for the rest of the decade.
“Ryanair operates a 737 fleet and is pretty much locked in,” with Airbus being sold for years and China being years away from being able to supply the West, said Agency Partners analyst Nick Cunningham.
Additional reporting by Padraic Halpin, Valerie Insinna Editing by Bernadette Baum
Our Standards: The Thomson Reuters Trust Principles.