Ryanair sees its rivals failing, cheaper Max deal after virus

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. 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 criticising bailouts being offered to rivals such as Air France-KLM, bankrupt Alitalia SpA and Deutsche Lufthansa AG.
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 UK carrier Flybe Ltd, and weakened others including Norwegian Air Shuttle ASA.
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 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.
Ryanair said 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.