Ryanair Said to Sign Accord With China to Work on Comac Jet
Stock Chart for Ryanair Holdings PLC (RYA)
Ryanair Holdings Plc (RYA), the second- biggest buyer of Boeing Co. (BA) jets, plans to work with China on the C919 plane that the country is designing to challenge the U.S. manufacturer and its rival Airbus SAS in the single-aisle market, a person with direct knowledge of the talks said.
Ryanair Chief Executive Officer Michael O’Leary will announce the plan at a press briefing organized by Commercial Aircraft Corp. of China next week at the Paris Air Show, said the person, who spoke on condition of anonymity because the negotiations remain confidential. The accord would make the Dublin-based budget carrier a partner in defining design elements such as the jet’s size and shape, the person said.
Comac, as the state-controlled company is known, plans test flights for the C919 in 2014, with entry into service by 2016. The jet, which seats about 150 people, aims to pry open the duopoly of Airbus and Boeing in the single-aisle market, the largest part of the civil aviation industry. By teaming up with Comac, Ryanair would potentially undermine Boeing as the U.S. company weighs an upgrade of its 737 jet or an all-new plane.
“The Chinese want to be part of the global aircraft industry and I think a lot of airlines would welcome having somebody else apart from Boeing and Airbus,” said Joe Gill, an analyst at Bloxham Stockbrokers in Dublin. “But you’ll find plenty of skeptics who’ll say Ryanair is bluffing, trying to up the ante with Boeing until Boeing cracks.”
Ryanair said in 2009 it had pulled out of a deal to buy 200 additional 737s after failing to agree unspecified terms with Boeing despite having settled on a price for the aircraft.
Airbus, based in Toulouse in southern France, has been offering carriers a version of its A320 single-aisle plane with new engines, slated for service at the end of 2015. The company has picked up more than 400 firm orders or commitments for the aircraft since announcing the plan at the end of 2010.
Comac said in March it expected 50 to 100 orders this year for the C919, the nation’s first passenger jet. The aircraft will be as much as 15 percent more fuel-efficient than existing narrowbodies, Chen Jin, general manager for sales and marketing, said at the time.
As of March 31, Ryanair had 272 Boeing 737-800s in its fleet, with firm orders for an additional 40. That makes the Irish carrier the model’s No. 2 operator after Southwest Airlines Co., which has 553, according to research firm Ascend.
Ryanair is “in conversation” with planemakers about its fleet plans and those talks include Chinese and Russian manufacturers, as well as Boeing and Airbus, Chief Operating Officer Michael Cawley said in an interview on Jan. 31, adding that the carrier is “not wedded to any aircraft manufacturer.”
Stephen McNamara, a spokesman for Ryanair, declined to comment on Comac today.
British Airways signed a memorandum of understanding with Comac at the Farnborough Air Show in Britain last July, agreeing to initiate talks about “future aircraft needs,” the unit of International Consolidated Airlines Group SA confirmed today.
“Most airlines feel they are over a barrel when it comes to dealing with Boeing or Airbus,” Bloxham’s Gill said. “They don’t feel they have too many options. It’s a funny industry, where you only have two players.”
Gill said in a note to investors yesterday that an order from Ryanair, Europe’s biggest discount airline, would give the C919 global legitimacy and be “one helluva a strategic play.”
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