Tuesday 21 October 2014

Ryanair to buy 200 Boeings in $18bn order

Published 12/03/2013 | 05:00

Ryanair boss Michael O'Leary
Ryanair boss Michael O'Leary
Ryanair currently has a fleet of 305 Boeing 737s-800s

RYANAIR has placed an $18bn (€14bn) order with Boeing to buy up to 200 aircraft, the Irish Independent has learned.

The mammoth order – due to be confirmed by US President Barack Obama and Taoiseach Enda Kenny at the White House next week – is the single biggest aircraft purchase ever agreed by Ryanair. It's also one of the biggest orders ever placed with Seattle-based manufacturer Boeing.

It means Ryanair has all but thrown in the towel in its seven-year battle to buy Aer Lingus, and will now focus once more on its own long-term expansions efforts. A spokesman for the airline declined to comment.

The EU blocked Ryanair's third Aer Lingus takeover attempt two weeks ago.

The order will be used to replace some existing aircraft in Ryanair's fleet, but it means the carrier will be in a position to extend its footprint to even more corners of Europe and outside the region.

Ryanair is on target to carry 80 million passengers in the year to the end of this month, and is in talks with as many as 60 airports about either adding services or flying to them for the first time.

Airports

It has even been talking to airports in Israel. Ryanair chief executive Michael O'Leary said in January that the airline was in the "fairly early stages of talks" with Boeing in an effort to reach an agreement on pricing for new jets. He's looking for orders to be delivered between 2015 and 2017.

That will help Ryanair boost its annual passenger figures to 120 million. He said Ryanair would only place an order "when the price is right". Ryanair's fleet currently comprises 305 Boeing 737-800 aircraft – the airline is the world's largest operator of that type.

The 737-800 model currently has an $89.1m (€68.5m) list price, according to the aircraft manufacturer. Last December, Ryanair received the final two aircraft of a historical order it had with Boeing.

It's not clear at this stage whether Ryanair has plumped for the 737-800 or Boeing's new 'Max' variation.

The new agreement also buries the hatchet in what was effectively a three-year stalemate between Ryanair and Boeing.

The pair fell out in 2009 as Ryanair pulled a planned order for up to 200 aircraft that had a $14bn list price (€9.8bn at the time). Mr O'Leary described the collapse of that deal as "remarkable" given that the two aviation firms had already agreed pricing for the jets. Boeing wanted to alter some conditions Ryanair enjoyed, related to warranties, for instance.

Mr O'Leary labelled Boeing executives as a "bunch of idiots" and "numpties" for letting the contract fall through. He also warned at the time that Boeing, whose corporate HQ is in Chicago, would have to come back with a "significant" discount for any subsequent deal to be done.

Ryanair has always pushed for tough terms with Boeing. In early 2002, soon after the terror attacks on New York and Washington, Ryanair placed an order for 100 aircraft with Boeing, taking advantage of depressed pricing.

Those aircraft had a $9.1bn list price at the time, but the manufacturer gave Ryanair a steep discount to secure the order.

Irish Independent

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