By Siddharth Philip / Bloomberg
Ryanair Holdings is near an agreement to order more Boeing Co. 737 Max aircraft, giving the U.S. planemaker a shot in the arm as the single-aisle jet comes off an unprecedented 20-month grounding.
An announcement could come as early as Thursday, according to the people, who asked not to be named before a deal is finalized. Ryanair, Europe’s biggest discount airline, has 135 Max jets on order and options to bring the total to 200 or more.
A significant order from a marquee customer like Ryanair would bolster confidence in the Max, and help repnlenish a Boeing backlog that’s been depleted since the start of the Covid-19 crisis. The Max’s prolonged grounding exacerbated the impact of the air-travel slump on the U.S. planemaker by giving cash-strapped airlines and leasing firms negotiating leverage to cancel orders rather than just defer them.
For Ryanair, an added Max order would position the Irish carrier to expand over the medium-term as passenger traffic returns and financially weaker competitors nurse their balance sheets back to health. Chief Executive Officer Michael O’Leary has called the Max a game-changer that will allow the airline to add capacity while reducing fuel burn.
The Max was grounded worldwide in March 2019, after two fatal crashes that killed a total of 346 people. It was cleared to fly again by the Federal Aviation Administration last month, and European regulators expect to allow the plane to fly in the region by mid-January.
Ryanair operates a fleet of all-Boeing jets and has said it’s in talks for a follow-on order. The Irish carrier said it declined to comment on speculation. Chicago-based Boeing declined to comment.
Ryanair shares were down less than 1% as of 2:38 p.m. in Dublin. The shares have gained 6.9% this year — one of the few airlines worldwide that has seen an increase. Boeing was little changed at $213.04 in New York. The stock has dropped 34% this year, the second-worst performance on the Dow Jones Industrial Average.
Boeing lost hundreds of orders for the Max this year, after the coronavirus pandemic wrecked airline balance sheets, losing ground to European rival Airbus SE.
While both planemakers have been in intense negotiations with their customers, the U.S. manufacturer has had to contend with the added burden of resolving compensation claims for deliveries that were postponed due to the idling of the Max.
Boeing has lost hundreds of orders because of the lengthy grounding, which allowed customers to walk away from contracts after delivery is delayed for more than a year. The company has also been searching to find new homes for about 100 white tails — jets built during the grounding and later abandoned by buyers.
There have been a handful of small orders for the Max since it’s been idled, and a letter of intent by IAG last year for 200 planes that was reached before the virus hit but hasn’t been finalized.
Ryanair first ordered the Max in 2014, and currently has orders for 135 of a specialized version of the plane that can carry more passengers than the standard Max 8.
O’Leary has been a vocal supporter of Boeing’s best-selling jet during the crisis, and has previously said the airline would look to buy more of the model. He said last month that Ryanair plans to take delivery of 30 Boeing Co. 737 Max 200 jets by next summer, plus a further 60 planes for the peak season in 2022.
While the coronavirus pandemic has decimated travel, and carriers including Ryanair have slashed capacity, O’Leary expects the availability of a vaccine will help melt away travel restrictions that would allow traffic to return to near-normal levels by summer — and possibly by Easter, which falls in early April.