Boeing Secures $15.6 Billion Order From Ryanair

New York Times — Boeing said on Tuesday that it signed an order for 175 single-aisle 737s, its biggest deal so far this year, from the European low-cost carrier Ryanair.

The agreement is valued at $15.6 billion at current list prices, although Ryanair, as most large customers, received a significant discount. Neither company provided the final sale price.

The big order offers a respite for Boeing, which has been struggling with battery problems that have grounded its innovative 787 jets since mid-January.

The deal provides the company a smooth transition in the production and sales of its 737s before it brings out a new version of its single-aisle plane with a more fuel-efficient engine. That plane, known as the 737 Max, is scheduled to come into service in 2017.

The agreement, signed in New York, will allow Ryanair, Europe’s leading low-cost carrier, to increase its fleet to 400 planes. Ryanair’s capacity will grow by 25 percent to 100 million passengers a year by 2018.

“This is a huge deal for the Boeing Company,” Ray Conner, the president and chief executive of Boeing’s commercial airplane division, said in a news conference in New York. “We’ve been talking about this for quite some time.”

The deal for Boeing comes after a spate of orders for the rival A320 from Airbus, which sold 400 planes in past weeks to Lufthansa, Turkish Airlines and Indonesia’s Lion Mentari Airlines. That last order, for 234 planes announced on Monday, has a list price value of $24 billion – the largest single order of Airbus jets, by both value and number of planes.

Ryanair is one of the few airlines with an all-Boeing fleet. The companies had failed to reach a deal in 2009 for new planes, and Ryanair said it had considered the Airbus A320 and even looked at China’s C919, a new entrant in the commercial plane business, possibly to add pressure on Boeing.

But Michael O’Leary, the chief executive of Ryanair, said the airline saw significant growth opportunities in Europe as other carriers cut back service.

Ryanair’s last big order with Boeing was in 2005, and its last plane was delivered at the end of 2012.

The new planes, all 737-800s with room for 189 passengers, are scheduled to be delivered between the end of 2014 and 2018.

“There is a pressing need for us,” Mr. O’Leary said at the news conference. “This makes it easier for Boeing to negotiate with us and to squeeze us for slightly higher prices.”

The carrier got a significant discount on its last 737 purchase and the new agreement has similar terms, said Mr. O’Leary. “That’s code for ‘We’re paying slightly higher prices because he’s bigger than me,’” said Mr. O’Leary, who was sitting by Mr. Conner and joked constantly at the signature ceremony about the price paid. Ryanair is renowned for its low-fare, bare-bones service.

“Fifteen billion dollars, and all I get is a pen,” Mr. O’Leary said. Then, as photographers snapped pictures of the two men, he added, “As you can see, this is a check for the Ray Conner vacation fund.”

Mr. Conner, who has spent much of the last two months heading the effort to fix the 787’s battery and shuttling around the world to reassure customers about the 787, responded: “I need a vacation after a while here.”

Posted on March 19, 2013
New York Times | Boeing Secures $15.6 Billion Order From Ryanair

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