Boeing Co. (BA) won an order from Ryanair Holdings Plc (RYA) worth $15.1 billion at list price, selling 170 737-model planes that are due be phased out in favor of the re-engined Max version, people familiar with the matter said.
The deal between Boeing and Dublin-based Ryanair may be announced as soon as next week, said the people, who asked not to be identified because the talks aren’t public. Airlines typically buy at a discount to the catalog price, which is $89.1 million for the 737-800, now the top seller in Boeing’s lineup.
Winning an order for the current 737 variant, known as the NG, is a boost for Chicago-based Boeing because airlines are shifting their sights to the more-efficient Max, leaving several hundred older models to be sold to ensure a smooth production transition. Boeing is preparing to introduce the upgraded plane in 2017 to compete with Airbus SAS (EAD)’s revamped A320neo.
“We’ve had the strategy of getting Max customers to also commit to NGs, and that’s paid off,” Boeing’s marketing chief, Randy Tinseth, said in an interview at the International Society of Transport Aircraft Traders conference in Orlando, Florida. He declined to comment on the Ryanair order.
Ryanair spokesman Robin Kiely said Europe’s biggest low-cost airline “does not comment upon, or engage in, rumor or speculation.” The Irish Independent newspaper reported yesterday that Chief Executive Officer Michael O’Leary had placed an order for as many as 200 Boeing planes, to be signed next week.
“He’s found his time and he’s found his aircraft,” Sash Tusa, an analyst at Echelon Research & Advisory LLP in London, said of O’Leary’s strategy in an interview with Bloomberg Television. “If he does this deal, he’ll get it for nothing. He’s buying the bargain basement stuff and it’s a lovely deal.”
Boeing rose 1.5 percent to $84.16, the highest since May 2008, at yesterday’s close in New York. The shares have gained 12 percent this year, topping the 8.9 percent advance for the Standard & Poor’s 500 Index even while the planemaker works to end the grounding of its wide-body 787 Dreamliner.
Ryanair traded 0.7 percent lower at 5.80 euros as of 10:23 a.m. in Dublin today, paring gains this year to 23 percent.
Aer Lingus Delay
The Irish company’s order, its largest ever, also ensures it will remain an all-Boeing operator, though the choice of the NG over the Max reflects some skepticism about the new plane.
O’Leary has questioned the capacity of the Max, as well as its efficiency and waste-handling costs. The current fleet is made up of 305 737-800s averaging less than four years old.
Ryanair had been delaying a jet order while pursuing a 694 million-euro ($909 million) bid for Aer Lingus Group Plc (AERL), an acquisition that European competition authorities blocked for a second time last month. The Boeing order positions it to meet a target of carrying 120 million passengers a year within a decade, up from 79.9 million in 2012.
Ryanair had said it was also considering Airbus A320neos, as well as the C919 from Commercial Aircraft Corp. of China, a new entrant to the single-aisle market. Another option on the table, according to O’Leary, was to pick up jet orders from rivals struggling to fund purchases.
The carrier’s gross cash balance stood at 3.15 billion euros at the end of the third quarter. It paid out a special dividend of 34 cents a share for the three months ended Dec. 31, bringing the total returned to shareholders over the past five years to 1.53 billion euros.