(Bloomberg) -- Ryanair Holdings Plc. sees an opportunity to buy planes for less and reduce other costs with weaker rivals out of the picture once the airline industry emerges on the other side of the coronavirus pandemic.
Dublin-based Ryanair is in “advanced discussions” with Boeing Co. over pricing for 737 Max jets, Chief Executive Officer Michael O’Leary said at a Financial Times summit held virtually on Tuesday. The discussions encompass both an existing order for 135 of the grounded narrow-body jets as well as a potential follow-on deal for a larger Max version, according to the airline.
Talks with Boeing, tied to compensation for delivery delays of the Max, won’t be concluded until the plane has been approved for a return to service, O’Leary said. He doesn’t expect that to happen until August or September, he said.
Boeing declined to comment.
Europe’s largest low-cost carrier has already decided not to accept 10 Airbus SE A320 aircraft it was due to receive from leasing firms for its Austrian Lauda unit.
“I see nothing but opportunity coming out of this. But I don’t underestimate the challenge facing Ryanair and our people as we try to compete in what is going to be a very difficult marketplace,” O’Leary said, railing against state-aid packages being doled out to rivals.
Ryanair’s competitors will have “30 billion euros worth of firepower to throw at us over the next two or three years,” he said, after criticizing bailouts being offered to rivals such as Air France-KLM, bankrupt Alitalia SpA and Deutsche Lufthansa AG.
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Ryanair is among the best-positioned carriers to ride out the coronavirus pandemic with about 3.8 billion euros ($4.1 billion) in cash, according to Bernstein.
O’Leary has consistently opposed the bailouts that would save weaker airlines, arguing that they are in breach of European Union competition and state-aid rules. Still, the crisis has claimed a number of European competitors, including domestic U.K. carrier Flybe Ltd., and weakened others including Norwegian Air Shuttle ASA.
Reversal of Fortunes
Boeing and Airbus are also feeling the impact. Both have slashed production rates as they face requests from airline customers to defer or cancel orders.
That gives O’Leary more power in negotiations with the airframers. Europe’s biggest low-cost carrier has 135 Max jets on order, with 75 options, and O’Leary said in February that he’s considering buying a larger version as well.
The Max has been grounded for over a year following two fatal crashes, and Boeing now expects the plane to return to service in the third quarter of 2020.
O’Leary has previously sought to pit the two manufacturing giants against each other to get good deals. Before the crisis hit, the airline chief had said he would consider buying more Airbus jets at the right price. That was when the Toulouse, France-based manufacturer held a record order backlog and had no need to give discounts.
But the coronavirus led to a rapid reversal of fortunes, and Airbus logged just nine net orders in April. Boeing, meanwhile, lost 108 Max orders alone last month.
Ryanair said Tuesday that it plans to resume almost 1,000 flights a day starting in July. The airline expects airports to offer growth incentives to recover lost traffic after other carriers pare back or collapse.
“We’ve already seen Thomas Cook, Flybe and others have gone bust,” said O’Leary. Norwegian Air will emerge much smaller after its restructuring, he said. “Ryanair, as an airline with 200 aircraft on order for the next four or five years, will be in a position to negotiate very attractive growth.”
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