Ryanair has restarted talks with American manufacturer Boeing with regards to a brand new, bulk 737 MAX order.
This comes a couple years after talks were halted due to the budget carrier being unhappy with the price tag Boeing placed on such an order.
With this in mind, Ryanair has now re-entered these talks with Boeing with a fresh mindset, saying that it accepts the fact that it will need to pay a higher price.
The specific type of aircraft Ryanair is looking to place an order for is the 737MAX-10, the largest variant of the family range.
In addition, when Ryanair does place the order, the number of jets ordered is expected to be in the hundreds.
The Irish giant will also get a handful of benefits from this order, including 30+ seats over the MAX-8-200 and it will place the airline in a fighting chance with its competitors easyJet and Wizz Air.
This is because these major European budget airlines are already operating the A321ceo and neo variants, which have a similar capacity to the MAX-10.
O’Leary is prepared to pay the higher price
As we know, Ryanair’s CEO Michael O’Leary froze talks with Boeing back in 2021 over an order for the Boeing 737 MAX-10 aircraft, due to O’Leary not being happy with the price proposal.
Following the freeze, O’Leary proceeded to talk down Boeing, explaining that this increase in price for aircraft did not suit Ryanair’s business model, and as a long time Boeing customer, this built some tension between the two companies.
He also went on to say that this increase in price for aircraft was one of the driving factors as to why many airline were turning to the likes of Airbus for fleet renewals.
For example take KLM and Transavia and Qantas, whos current short fleet matrix consists of 737 family aircraft and have now opted for A320 and A220 family aircraft to replace these jets.
But now Ryanair’s CEO is putting all of that in the past as he enters new talks with Boeing over a new deal for more 737 MAXs.
In a recent interview with the Financial Times, O’Leary commented on the breakdown of talks 18 months ago over what was considered “egregious pricing by Boeing.”
The CEO reportedly accepts that a higher price would need to be paid to acquire the aircraft.
The MAX 10 brings a complex issue to the table
O’Leary has flagged that these talks could quite likely be successful and an announcement could come by the end of 2023 or in early 2024.
However, O’Leary has recognised a problem with incorporating larger aircraft into its fleet and that is yield dilution.
The way this problem comes about is due to the extra 30 seats the MAX 10 offers. This is because the airline will have to fill these additional 30 seats at least 6 times a day per aircraft (3 round trips).
With this large amount of yield dilution, Ryanair will have to offer a more competitive seat price and doing so could hurt the airline’s profits.
With this factor in mind, O’Leary will have to make a rather important choice between pushing forward with the MAX 10 or backing down for more MAX 8-200s. Whatever the CEO decides, we will have to wait and see over the course of this year before we find out.
