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Boeing To Get 737 MAX Order Boost From Ryanair - Sources

Published on Dec 3 2020 2:12 PM in General Industry tagged: Ryanair / Boeing / Boeing 737 MAX

Boeing To Get 737 MAX Order Boost From Ryanair - Sources

Ryanair is set to place a hefty order for up to 75 additional Boeing 737 MAX jets, throwing a commercial lifeline to the embattled US planemaker after regulators lifted a 20-month safety ban, industry sources have said.

The news came as American Airlines staged the first post-grounding demonstration flight of the MAX on Wednesday December 2.

Europe's largest low-cost carrier has been negotiating for months with Boeing over whether to exercise an option for 75 jets, lifting its total MAX order as high as 210 aircraft, as part of a compensation deal for delays caused by the grounding.

But a deal for dozens of jets only became possible once US and European regulators lifted the almost two year flight ban imposed in the wake of two fatal crashes - one of a number of eye-catching deals Boeing is seeking to overcome the crisis.

Ryanair and Boeing declined to comment.

The MAX, an upgraded single-aisle jet, was grounded in March 2019 following crashes in Indonesia and Ethiopia in which a total of 346 people died, spawning multiple investigations.

Regulators have begun clearing the aircraft for flight after revisions to cockpit software and pilot training.

An order from one of Boeing's largest customers is a pivotal moment in efforts by the company to rehabilitate the MAX, which was once its fastest-selling model. Ryanair has a record of striking deals to lock in low costs when its bargaining power is highest.

Each MAX is worth approximately $125 million at list prices, making a deal for up to 75 jets worth as much as $9 billion to Boeing on paper, helping to stem a haemorrhage in cash caused by a stockpile of 460 undelivered MAX jets outside its factories.

In practice, jets typically sell for closer to half their catalogue value, traders say. Ryanair is expected to win discounts closer to two thirds in return for a headline-grabbing relaunch of the MAX that helps fill gaps left by cancellations.

Aviation photographer Michael Kelly tweeted a picture of a Boeing company private jet landing in Dublin, fuelling speculation that Ryanair bosses will travel to the United States for the announcement, echoing a previous ceremony.

Boeing is also negotiating with other airlines including Southwest and Delta, industry sources have said.

Last month, Alaska Airlines agreed to lease 13 Boeing MAX jets.

Tariffs

Ryanair's order may, however, be overshadowed by new European Union tariffs on Boeing jets, bringing a long-running trade row to a head in the midst of the US electoral transition.

The EU imposed the tariffs last month after a green light from the World Trade Organization, echoing WTO-backed tariffs imposed by the United States on Airbus jets last year.

Both sides have called for negotiations, while refusing to rule out further increases in the tariffs.

Ryanair, meanwhile, has said that it expects Boeing to absorb the cost of the 15% European tariffs on planes already ordered.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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