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Ryanair Buys 75 Boeing MAX Jets In Largest Order Since Grounding

Published on Dec 5 2020 10:00 AM in General Industry tagged: Trending Posts / Ryanair / Boeing / Boeing 737 MAX

Ryanair Buys 75 Boeing MAX Jets In Largest Order Since Grounding

Following reports from industry sources earlier this week that Ryanair was set to place an order for up to 75 additional Boeing 737 MAX jets, the budget airline has now officially ordered 75 Boeing 737 MAX jets with a list price of $9 billion, throwing a commercial lifeline to the embattled US planemaker after regulators lifted a 20-month safety ban.

The order from Ryanair, which is one of Boeing's most important customers, is the largest order for the jet since 2018 before two fatal crashes led to a 20-month global flight ban.

Boeing shares were up 6% on the news.

"I've always had faith that the order book would begin to fill with the return of the industry," Boeing chief executive David Calhoun said at a signing ceremony in Washington.

As regulators move to clear the aircraft for flight after revisions to cockpit software and pilot training, Boeing is hoping for more eye-catching MAX orders, sources have said.

"It's certainly the deal of the new century," Ryanair chief executive Michael O'Leary told Reuters later.

Ryanair did not disclose the price that it will pay, but traders say deals typically include discounts in excess of 50% of list prices.

Ryanair is expected to win an even bigger discount of well over two-thirds in return for a headline-grabbing relaunch of the MAX that helps fill gaps left by cancellations, sources said.

Part of the discount was compensation for the 18-month delay of the first delivery of the MAX, O'Leary said.

Asked during the signing ceremony about price concessions Boeing offered, O'Leary joked, "Not enough...I am sorry to say it is a very modest discount."

Even at a fraction of the MAX's list price of $125 million, the deal could help to stem a haemorrhage in cash caused by a stockpile of roughly 450 undelivered MAX jets being stored by Boeing.

Ryanair already has 135 of the 197-seat MAX 200 on order, and expects to receive its first jet early next year and the final one by the end of 2024. Ryanair also hopes to agree to another large order of the 737 MAX over the next 18 months, and expects to be flying the 230-seat MAX 10 by 2025, O'Leary told Reuters.

"I think regulators are looking for some further design work to be done, so I think the delivery of the MAX 10 is going to slip back maybe 12 to 18 months," he said.

The order could be a pivotal moment in efforts by Boeing to rehabilitate the MAX, which was its fastest-selling model before it was grounded in March 2019 following crashes in Indonesia and Ethiopia in which 346 people died.

The jet staged its first post-grounding flight with media on board on Wednesday December 2, weeks before the first commercial passenger flight on December 29.

Boeing is also negotiating with airlines including Southwest and Delta and Alaska Airlines, which agreed to lease 13 Boeing MAX jets last month, industry sources have said.

Ryanair has a record of striking deals to lock in low costs when its bargaining power is highest, most famously by placing an order for 100 new 737s at rock-bottom prices in the wake of the September 11, 2001, attacks on the United States.

That deal laid the foundation for its transformation into one of Europe's dominant airlines.

"No One Will Be Able To Compete"

Sharp discounts could allow Ryanair to sharpen competition with other European budget carriers such as easyJet and Wizz Air for the lowest fleet costs, a key driver for the ability to slash fares.

"No one will be able to compete with us with these aircraft," O'Leary said.

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

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