Due to tariffs imposed by the United States, which have increased prices, Ryanair threatened to cancel hundreds of Boeing aircraft orders. The budget airline is considering using alternative suppliers, including Chinese manufacturer COMAC.
The story was first published on Thursday by Reuters.
At a list price of more than $30 billion, the airline had ordered 330 Boeing 737 MAX aircraft.
In a letter to an undisclosed senior US lawmaker, Ryanair’s CEO Michael O’Leary wrote, “We would definitely reassess both our current Boeing orders and the possibility of placing those orders elsewhere, if the US government proceeds with its ill-judged plan to impose tariffs,” according to Reuters.
If Trump doesn’t remove the sector from his tariff plans, the threat from Europe’s largest low-cost carrier, one of Boeing’s biggest customers, was the most recent indication of a potential reorganization of the world aerospace industry.
The letter, which was seen by Reuters, was a response to an obverse warning from Illinois-based Democrat from Illinois, Raja Krishnamoorthi, about the security ramifications of Ryanair’s earlier suggestion that it might take a COMAC order into account.
However, according to an industry source, Ryanair may find it difficult to follow through on its threat because COMAC is not yet certified in Europe and Airbus’s main rival Airbus has declared it will be sold out for the rest of the decade.
escalating tensions
O’Leary’s letter is an extension of a previous threat from April, in which he claimed the airline would halt deliveries.
He claimed in March that Boeing executives had been confident that Trump’s tariffs would be lifted for commercial aircraft.
Since the sector has long relied on tariffs, according to sources in the aviation sector, Boeing and Airbus contracts have never included any such provisions in their contracts. Tariffs only become due once the contract has been completed and the aircraft’s ownership has passed to the new airline.
According to the sources, the majority of contracts for aircraft purchases have a clause requiring both parties to pay their own taxes without making any specific mention of tariffs. However, many aerospace companies are reportedly reviewing the language of future agreements on the assumption that trade turbulence will persist.
O’Leary’s statements in the letter may serve as a tactical tip in the middle of a potentially contentious negotiation process with Boeing, according to sources within the sector.
COMAC increases exponentially
O’Leary stated in the letter that although the Irish airline hasn’t discussed aircraft purchases with COMAC since about 2011, it would “of course” take into account if they were 10 to 20% less expensive than Airbus’s main rival.
Airbus has stated on numerous occasions that it is sold out over the course of the decade, making it Boeing’s only viable option for large single-aisle aircraft that are currently certified in Europe.
A COMAC plane has not been purchased by any Western airline. The Chinese company has applied for US certification for its C919 jet in Europe.
The C919 jet is smaller than the MAX 10 and the Boeing planes Ryanair currently flies, which can accommodate up to 230 passengers, and has about 150 seats, or up to 190 in dense layouts.
Boeing is looking to resell potentially dozens of Chinese aircraft that were barred from the country after returning a third jet to the US in a delivery standoff that prompted Trump to express his concern about Beijing.
Due to the small number of suppliers and the possibility of returning to the back of the capacity queue, according to analysts, it is unusual for airlines to cancel aeroplane contracts rather than delay delivery.
Source: Aljazeera
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