Exclusive-Ryanair ready to wait years for Boeing to cut prices, says O'Leary
Reuters
Published Sep 08, 2021 04:34AM ET
Updated Sep 08, 2021 11:06AM ET
By Gavin Jones and Angelo Amante
ROME (Reuters) -Ryanair is willing to wait years for Boeing (NYSE:BA) to drop its prices before placing a big new plane order with the U.S. company, Chief Executive Michael O'Leary told Reuters, while he also downplayed the chance of a deal with rival Airbus.
The Irish budget airline, one of Boeing's biggest customers, said on Monday it had ended talks over a new order of 737 MAX 10 jets worth tens of billions of dollars because the prices on offer were too high.
"We're not wasting any time on those MAX 10 discussions nor will we for a period of 2, 4, 6, 8, 10 years until we get to the next crisis," O'Leary said in an interview.
"We at Ryanair have always had the discipline to wait out the cycle."
Boeing shares opened up around 0.2% after O'Leary's comments, which amplified his recent pressure on Boeing but did not rule out further negotiations. Ryanair shares rose 1.2%.
Europe's largest budget carrier is already the region's biggest MAX customer with 210 of the 197-seat MAX 8-200 on order. It has dangled a fresh order potentially worth $33 billion at list prices for up to 250 of the 230-seat MAX 10.
But O'Leary said there had been a "fundamental breakdown" in talks due to the fact that Boeing believed the COVID-19 crisis was effectively over while Ryanair believed the U.S. giant still badly needed an order.
"Boeing are looking for a price increase while many of their customers are moving to Airbus," O'Leary said.
"We take the view we are still in a period of great crisis. Boeing take the view that now the world is fine and it's all recovered and its latest pricing offer reflects that," he said.
Speaking in Madrid, however, the head of the group's largest airline, Ryanair DAC, struck a mixed tone on the recovery.
"Most European markets are recuperating ... the exception is the UK (where) there's this continued confusion (over COVID-19 restrictions)," Eddie Wilson told Reuters.
Boeing was not immediately available for comment. On Monday it said it valued Ryanair's business but had to exercise discipline and make decisions that made sense.
The U.S. giant appears to believe the market is finally moving in its direction after winning a series of orders, including 150 MAX 10 from United Airlines and outselling Airbus on narrow-body jets this year, market experts say.
It has also virtually cleared a stockpile of 200 surplus jets left without homes after the MAX crisis.
Between January and July, Boeing sold 524 of its 737 MAX compared with Airbus's January-August tally of 234 A320-family jets.
TALKS 'CAN BE RESTARTED' AT RIGHT PRICE
Ryanair's rare decision to go public over big-ticket plane negotiations comes after months of wrangling that had already delayed a deal for the largest version of the 737 MAX.
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A large new Ryanair order would provide a boost to the U.S. planemaker as it rebuilds confidence in the MAX, an aircraft grounded for 20 months until November after two fatal crashes.
It would also speed a tentative industry recovery from the COVID-19 pandemic.
"The talks can always be restarted, but only when Boeing realise they need to price competitively," O'Leary said.
Asked if Ryanair might consider Airbus in the medium term, O'Leary said it might, but that Boeing's European rival did not currently have a competitively priced short-haul aircraft either.
"There is always a prospect that Airbus become a significant supplier. But there is a chance that the Chinese - COMAC - could become a significant supplier to Ryanair in the medium term," he said.
Playing Boeing against Airbus to secure lower prices is doomed to failure as a strategy, he said.
"Basically its a duopoly," he said. "You don't get leverage by holding discussions with one or the other."
O'Leary said he was not concerned that the breakdown in talks would leave him with too few planes when his current order is completed in 2025 as Ryanair already had more aircraft on order than any of its competitors.
Written By: Reuters
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