Ryanair set to order jets from Boeing after price spat

By Tim Hepher and Valerie Insinna

PARIS/WASHINGTON (Reuters) -Ireland’s Ryanair is set to bury the hatchet with its exclusive supplier and place a multi-billion-dollar order for Boeing (NYSE:) jets on Wednesday, ending an 18-month spat over prices.

Boeing said it would make a “major announcement” at 1300 GMT in Washington, but gave no further details. Ryanair, whose shares were up 0.8% in Europe, declined to comment.

On Monday, Reuters first reported that Europe’s largest budget carrier Ryanair, looking for up to 200 more Boeing 737s to secure the next phase of its growth, was close to a major deal for a three-digit number of jets as early as Tuesday.

Sources said the deal could involve as many as 200-300 jets including a significant number of options.

Such a deal would mark a long-awaited truce between Boeing and Ryanair, whose outspoken Chief Executive Michael O’Leary last year broke off talks and issued a barrage of criticism over pricing and delays in the arrival of previously ordered jets.

“There is only one airline in the world willing and able to buy Boeing planes and they can’t seem to find us,” O’Leary told reporters last March while exploring second-hand jets instead.

In a signal to its investors, Boeing, which usually never comments on customer negotiations, said at the time it valued Ryanair’s business but vowed to remain “disciplined” on 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.

Analysts said that once the dust settles from the recent dispute, all eyes would be on indications of whether Ryanair has managed to pay less per seat than earlier orders. Ryanair will be keen to play up its low cost base, which underpins low fares, but Boeing is keen not to be seen as caving in on jet prices.

The 737 MAX sells for up to $131 million at list prices but typical discounts run at more than 50% and details of final pricing are confidential.

Industry sources say Ryanair has in the past been able to negotiate a special clause guaranteeing the lowest prices in its region – one of a tiny handful of airlines able to benefit from such treatment alongside Southwest Airlines (NYSE:).

But the bond between Ryanair and Boeing loosened following the pandemic as low-cost carriers expanded markets.

Despite O’Leary’s tough stance, however, industry sources have said Ryanair has lost some advantage in the negotiations as other carriers including United Airlines stepped up with significant orders for the MAX 10.

“Ryanair operates a 737 fleet and is pretty locked in,” with Airbus sold out for years and China years away from being to supply the West, Agency Partners analyst Nick Cunningham said.

The deal could nonetheless deliver a boost to the largest version of Boeing’s 737 MAX, a series whose deliveries have been depressed by a two-year safety crisis and post-COVID disruption.

O’Leary has expressed interest in the 230-seat MAX 10 variant, which has yet to be certified. But he has pledged not to overpay for the 30 extra seats, telling Reuters in March he was also looking at more orders of the 200-seat 737 MAX 8200.