Daily Management Review

Ryanair To Purchase 75 Boeing MAX Jets As Grounding Order Lifts For The Jets


Ryanair To Purchase 75 Boeing MAX Jets As Grounding Order Lifts For The Jets
The embattled United States plane maker Boeing was given a commercial lifeline, after a 20-month safety ban on its 737 MAX jets was lifted recently by regulators, by the budget airline Ryanair as it ordered 75 of the planes from the company at a list price of $9 billion.
Since 2018, when two fatal crashes led to a 20-month global flight ban, this latest order from the Irish airline, the biggest low-cost carrier of Europe as well as one of the most important customers of Boeing, was the largest one for the jet.
The new lifted shares of Boeing by 6 per cent. 
"I've always had faith that the order book would begin to fill with the return of the industry," Boeing Chief Executive David Calhoun said at a signing ceremony in Washington.
According to reports quoting company sources, Boeing is hoping for more large orders for the 737 MAX planes even as regulators across the world are set to clear the aircraft for commercial flights again after changes being made to the plane’s cockpit software and pilot training.
"It's certainly the deal of the new century," Ryanair Chief Executive Michael O'Leary told the media.
While the price it will pay for the planes has not been disclosed by Ryanair, reports quoting traders said that discounts in excess of 50 per cent of the list prices are typically included in such deals.
In exchange for a headline-grabbing relaunch of the 737 MAX plans which will help Boeing to fill gaps left by cancellations earlier, it is expected that an even bigger discount of well over two-thirds would be given to Ryanair, claimed reports quoting sources.
O'Leary said that compensation for the 18-month delay for the first delivery of the MAX will be part of the discount.
"Not enough ... I am sorry to say it is a very modest discount," O'Leary said jokingly when asked about price concessions Boeing offered, during the signing ceremony.
The deal with Ryanair will help Boeing to slow down a burning of cash resulting from the stockpile of about 450 undelivered 737 MAX jets that are currently being stored by the company even if the company offers a hefty discount to the airline on the list price of $125 million for the planes.
135 of the 197-seat MAX 200 on order already exist with Ryanair. The airline now expects to get the delivery of the first plane sometime early next year and the last one by the end of 2024.
"I think regulators are looking for some further design work to be done so I think the delivery of the MAX 10 is going to slip back maybe 12-18 months," he said.
This order from Ryanair could be crucial for Boeing as it tries to rehabilitate the MAX which has been its fastest-selling model prior to its grounding in March 2019 after two deadly separate crashes within a period of five months from one another in which 346 people were killed.