Ryanair places big order to buy 175 Boeing 737s…at a hefty discount

Financial deals not disclosed, but analysts estimate airline received 50% discount off list price of $15.6 billion.

March 19, 2013   by The Canadian Press

DUBLIN, Ireland – Ryanair has made the biggest-ever order of Boeing planes by a European airline, announcing it will buy 175 aircraft in a major boost for the US aerospace giant.

Neither side disclosed the purchase price for the 737-800s, but budget carrier Ryanair said it did negotiate a bulk discount off the total list price of $15.6 billion. Industry analysts said Ryanair almost certainly was paying less than half price, meaning a total bill below $8 billion, or $45 million per aircraft.

The deal was timed to coincide with a visit by Irish Prime Minister Enda Kenny to Washington, DC to meet President Obama and senior American legislators for St. Patrick’s Day-related events. Kenny plans to visit Seattle and Washington State, the base for Boeing operations in the Pacific Northwest, later this week.

The move also takes the sting away from Boeing’s loss of a big order on Monday, when Indonesia’s Lion Air gave Boeing rival Airbus an order for more than 200 single-aisle planes.

Ryanair already operates a fleet of 305 Boeing 737-800 Next Generation aircraft. It is Boeing’s biggest European customer for the model, which launched in 1997 and faces global competition from the Airbus A320. Both are single-aisle aircraft with cabins that typically carry 150 to 200 passengers.

Boeing’s primary 737 assembly line in Renton, Washington, faces a transition to building a newer model called the 737 MAX by 2017. Ryanair’s order represents about a half-year of full-time work for the plant.

About 75 of the new-order 737s will replace older airplanes, but the fleet would grow to 400 by 2019. Ryanair expects its passenger volume to grow around 20% to 100 million passengers by 2019, by which time its workforce would expand from 8,500 to around 11,500.

The purchase contract for much of Ryanair’s current Boeing fleet was agreed in the months following the 9-11 terrorist attacks, when airlines struggled to place new orders, and later Ryanair regulatory filings in Dublin confirmed that it received a 53% discount off Boeing’s list prices.

©The Canadian Press

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