Boeing Co sealed a landmark order for its 737 MAX jet from Ryanair Holdings Plc, in a major boost for the US plane maker’s efforts to revive its best-selling model after a 20-month grounding.
Dublin-based Ryanair will add to an existing MAX purchase by taking 75 more of the single-aisle aircraft, the companies said in a statement yesterday. The firm order has a list value of $9.4bn before significant discounts that are customary for aircraft purchases.
The deal gives the embattled MAX a seal of approval from Europe’s most valuable airline as Boeing attempts to restore global confidence in the workhorse jetliner. Regulators worldwide grounded the plane in March 2019 after two crashes in less than five months killed 346 people. It was cleared to fly again by the US Federal Aviation Administration last month, while European regulators granted preliminary approval.
“Ryanair is once again placing its confidence in the Boeing 737 family and building their future fleet with this enlarged firm order,” Boeing chief executive officer Dave Calhoun said. “We firmly believe in this airplane and we will continue the work to re-earn the trust of all of our customers.”
Boeing climbed 3.6% to $231.89 at 9:51am in New York. Ryanair was up less than 1% at €15.83 in the Irish capital.
The additional jets position Ryanair to expand in coming years as travel rebounds from a collapse caused by the coronavirus pandemic, and financially weaker competitors nurse their balance sheets back to health. CEO Michael O’Leary called the plane a game-changer that will enable his airline to add capacity while reducing fuel burn.
The order takes Ryanair’s MAX backlog to 210 planes, all of them higher capacity -200 variants, with deliveries set to commence next year. O’Leary said in the release he expected customers would “love these new aircraft,” without mentioning the model’s safety record.
Ryanair and Boeing agreed to revised delivery dates for the MAX following its idling, together with compensation to cover direct costs incurred. Some of that money was factored in as a “modest reduction” in the final pricing of the new aircraft, the carrier said.
Boeing has lost hundreds of orders for the MAX this year, ceding ground to Airbus SE and enabling the European manufacturer to widen its lead in the critical market for narrow-body jets.
While both companies have been in intense negotiations with customers because of the pandemic, Boeing has had to contend with the added burden of resolving compensation claims for deliveries that were postponed due to the MAX ’s idling.
The grounding has given customers the ability to walk away from contracts where delivery was delayed for more than a year. Boeing has also been seeking new homes for about 100 so-called white tails — jets built during the hiatus and later abandoned by buyers.
Boeing has garnered a handful of small orders for the MAX since the plane’s grounding, and last year landed a letter of intent for 200 planes from British Airways owner IAG SA. That deal hasn’t been finalised.
Ryanair first ordered the MAX in 2014, and O’Leary has been a vocal supporter of the model during the grounding.
While the pandemic has decimated travel, the CEO has said he expects the availability of a vaccine to boost traffic to near-normal levels by summer 2021 — and possibly by Easter, which falls in early April.
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