A Ryanair Boeing 737-800 plane is preparing to take off at Krakow Airport.
Omar Marques | Getty Images News | Getty Images
DUBLIN – Boeing faces one of its biggest customers after Irish company Ryanair said it had ended talks on a purchase of 737 MAX 10 aircraft worth tens of billions of dollars due to price differences.
The rare decision to go public for large-ticket aircraft negotiations comes after months of fights that had already delayed the deal for the larger version of the 737 MAX when Ryanair re-ordered a smaller model at the December.
A new major order from Ryanair would provide a boost to the US aircraft maker as it rebuilds confidence in the MAX, set for 20 months until November after two fatal crashes. It would also accelerate a temporary recovery of the COVID-19 pandemic industry.
Europe’s largest budget carrier is already the largest MAX customer in the region, with 210 of the MAX 8-200 of 197 seats on order. It has placed a new order potentially worth $ 33 billion at list prices of up to 250 of the 230-seat MAX 10.
Even after heavy discounts across the industry, this deal would still be worth more than $ 10 billion, according to analysts.
But last week, Ryanair Group CEO Michael O’Leary poured cold water with chances of making a quick deal, saying he would be surprised if an agreement was reached this year.
On Monday, he said the talks had collapsed.
“We’re disappointed we can’t come to an agreement,” O’Leary said. “However, Boeing has a more optimistic view of the price of aircraft than we do, and we have a disciplined track record of not paying high prices for the aircraft.”
Boeing also promised to exercise discipline.
“Ryanair is a long-standing partner. We value their business and are committed to supporting them,” a Boeing spokesman said. “At the same time, we continue to be disciplined and make decisions that make sense to our customers and our company.”
Shares of Ryanair rose 1.8%. The American markets, where Boeing appears, were closed for Labor Day celebrations.
Although Ryanair has nominally ended talks, analysts said it is at stake that public pressure will lure Boeing to the table with an improved offer as the aircraft manufacturer wastes the consequences of the MAX crisis, uncertainty over COVID -19 and industrial problems.
However, Boeing seems to believe that the market is moving in its direction after winning a number of orders, including the United Airlines 150 MAX 10.
Industry experts say Ryanair is one of two budget heads alongside Southwest that can insist on Boeing’s best prices.
The spread of COVID-19 variants and public acceptance of the MAX will help determine whether prices have more room to fall or whether Ryanair, one of the toughest negotiators in the industry, has lost market share in the larger MAX model. .
“MAX values have increased very slightly as inventory decreases,” said Rob Morris, chief consultant at Ascend by Cirium. “We’re hearing less about some of the low prices.”
The MAX 10 has not yet entered service, but the estimated values of the slightly smaller MAX 9 have risen 2% recently, although they are still between 9-10% below pre-MAX crisis levels, he said. to say.
Despite the breakup with Boeing, O’Leary has repeatedly downplayed the prospect of a dramatic deviation against rival Airbus due to a long waiting list for its hot-selling A321neo. The two companies have had strained relationships in the past.
On Monday, however, O’Leary referred to the fact that other Boeing customers had made deals with Airbus.
The British Jet2 last week closed a deal for 36 neo A321 aircraft worth about $ 4.9 billion.
Delta, which buys from both suppliers, added A321neo to its order book with Airbus in August.
Still, industry sources said Airbus might be wary of diluting what it considers a price advantage for its A321neo to be dragged into a price war on Ryanair that few expect to win.
“Boeing and Ryanair are likely to come to an agreement,” said an industry veteran.
Airbus declined to comment.