Ryanair says price still key to new Boeing jet deal

Ryanair says price still key to new Boeing jet deal
© Reuters. FILE PHOTO: Ryanair CEO Michael O’Leary attends a news conference in Brussels, Belgium January 17, 2023. REUTERS/Yves Herman/File Photo

By Tim Hepher and Joanna Plucinska

BRUSSELS (Reuters) – The head of budget giant Ryanair drew a line under a rare public spat with Boeing (NYSE:BA) on Wednesday by confirming talks over potentially ordering at least 100 new jets – but insisted significant discounts would still be needed to unlock a deal.

Europe’s largest budget carrier halted negotiations for at least 100 Boeing 737 MAX 10 jets in a pricing dispute towards the end of the COVID-19 crisis some 18 months ago.

Chief Executive Michael O’Leary said on Wednesday Ryanair was now considering the 200-seat 737 MAX 8200 and the 230-seat 737 MAX 10 “as long as the price parameters are acceptable”.

A potential deal for 100 planes, plus 100 options, is likely to take several months to negotiate, he told Reuters on the sidelines of an A4E airline conference in Brussels.

Boeing shares were up 1% at mid-session in New York.

He also said he expected the U.S. Federal Aviation Administration to certify the 737 MAX 7, Boeing’s smallest model, in the first half of 2023 and the MAX 10 to win approval from U.S. regulators towards the end of this year.

Ryanair is one of Boeing’s largest customers and is seen as one of a handful of airlines that can insist on the best prices in their region, alongside U.S. carrier Southwest Airlines (NYSE:LUV).

In late 2021, O’Leary accused Boeing of trying to impose a “delusionary” price increase and declared a “marital rift” between the Irish carrier and its long-time sole supplier.

Boeing said at the time it valued Ryanair’s business but had to exercise discipline. On Wednesday, it declined comment.

Industry sources had said the breakdown was a test of two competing views on the speed of the post-COVID recovery, with Boeing gaining confidence from renewed sales of the MAX following a safety crisis and Ryanair prepared to wait it out.

O’Leary told the Financial Times last week that talks had resumed. On Wednesday, O’Leary said the breakthrough came after Boeing Chief Executive Dave Calhoun and Stan Deal, head of its commercial division, approached Ryanair two months ago.

“They are back talking to us; I think it takes maybe six, nine months to get a deal done,” he added.

The Ryanair CEO voiced support for Calhoun and said he hoped Boeing’s management would stabilise “over a number of years”, adding the company had been through a rough period of delays.

“I think Calhoun is putting together a good team and we would like to see that team stabilise over a number of years, and we could get back to kind of normal for doing business relations,” he said.

(This story has been corrected to say ‘Federal Aviation Administration’, not ‘Federal Aviation Authority’, in paragraph 6)

Source: Reuters