Airline Exec Calls Boeing Pricing 'Delusional'

Drama has intensified between Boeing and an airline it supplies exclusively.

The name may not be as familiar to Americans, but in Europe, the budget-friendly airline carried more passengers than any competitor in 2020.

And they carried them on Boeing planes. That’s because Ryanair has long maintained a fleet that’s solely supplied by Boeing in order to streamline operations. By using only variations of the 737 model, Ryanair says its able to move pilots seamlessly from craft to craft, keeping costs down and safety up.

Right now, according to Ryanair’s own website, the airline has more than 300 planes in its fleet but it’s got a lot more on order in support of an expansion it says will conclude with 520 total planes by 2024. This means that a fully booked Ryanair could fly 160 million passengers per year.

But there’s a problem, one which began hitting the news cycle earlier this month when representatives from Ryanair revealed that talks with Boeing over an order for its upcoming Max 10 jet had “collapsed” and it was due to a pricing gap that could not be resolved. At the time, Ryanair said both sides had agreed “to waste no more time on these negotiations."

This week, the drama appears to have intensified as Ryanair CEO Michael O'Leary was quoted as saying Boeing was “delusional” when it came to their pricing on the future orders and that their demands were "unjustified and inexplicable."

In a statement to Reuters, O’Leary suggested that European-based competitors like Airbus were key in setting market rates, and "if Boeing wants to sell aircraft in Europe, it needs to continue to be cost competitive” with the Airbus A320 family of jets. O’Leary goes on to say that Boeing has "a more optimistic outlook on aircraft pricing than we do," and that Ryanair has “a disciplined track record of not paying high prices for aircraft."   

Boeing has said that it values its relationship with Ryanair, but has to maintain some discipline when it comes to pricing. And despite coming off the harrowing pandemic year, many analysts believe that Boeing can. According to an interview with CNN, Richard Aboulafia, aerospace analyst with the Teal Group, believes that the “desperation pricing” that plagued Boeing’s 2020 is over. "We're past that,” he says, adding: “There are airline execs who would like to think when manufacturers lose pricing power, they never get it back. But that's not the way it works."

That said, analysts agree that Boeing will have to budge on its pricing though the sides are likely to meet somewhere in the middle.



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