Aerospace & Defense

Boeing Snags Order for 75 New 737 Max Jets

As expected, Ireland-based Ryanair Holdings PLC (NASDAQ: RYAAY) on Thursday signed a firm order for 75 new Boeing Co. (NYSE: BA) 737 Max 8-200 passenger jets in a deal worth about $9.4 billion at the list price of $124.8 million per plane. The deal lifts Ryanair’s firm orders for Boeing’s top-seller to 210 aircraft valued at more than $26 billion.

Interestingly, Boeing used the 737 Max designation only one time in the announcement of the deal. The aircraft were referred to more often as the 737 8-200 or the 737-8. The plane also has been referred to as the 737-8200. Boeing CEO David Calhoun said that the Max name isn’t going anywhere and that “there is nothing cute going on” with the plane’s name.

First delivery of new planes to the airline is expected to begin in the spring and run through 2024. Each plane will include two LEAP-1B engines from CFM, a 50/50 joint venture between Safran and General Electric Co. (NYSE: GE).

The 737 Max 8-200 is configured to seat 197 passengers, near the high end of a maximum capacity of 210 and more than the standard two-class configuration of between 162 and 178 seats.

According to Planespotters, the airline’s fleet of 737-800s (the previous generation) totals 433, of which 362 are currently in service. The fleet has an average age per plane of 8.8 years, young by aircraft standards and nearly five years younger than the 23 Airbus A320-200s in Ryanair’s fleet.

Aircraft makers typically sell their new planes to large buyers at discounts of 40% to 50% below list price. Ryanair likely is receiving an even larger discount as compensation for delivery delays due to the grounding of the 737 Max following two crashes that killed 346 people. As we noted on Wednesday, however, whatever Ryanair is paying is an improvement over zero, which is how much money Boeing has made on the 737 Max since its grounding in March 2019.

Leeham News and Analysis notes that Ryanair CEO Michael O’Leary said the deal was struck at a “modest discount” to the list price, and Boeing’s Calhoun said the company doesn’t “feel a need to discount our way into the marketplace.”

Calling the 737 Max the “most scrutinized, most audited planes in history,” O’Leary also said he “cannot tell you how confident” Ryanair is in the safety of the aircraft.

Ryanair and Boeing are also discussing an order for the larger 737 Max 10, O’Leary noted. He also believes that when President-elect Joe Biden takes office next month, the trade war between the European Union and the United States will be resolved and tariffs now imposed on exports of Boeing and Airbus planes across the Atlantic will be lifted.

Boeing stock traded up about 8% in the noon hour Thursday, at $241.57 in a 52-week range of $89.00 to $354.40. The stock’s consensus price target is $200.55.

GE’s shares traded up about 2.5%, at $10.69 in a 52-week range of $5.48 to $13.26, and Ryanair stock traded up about 3.4% to $110.21, in a 52-week range of $44.44 to $111.53, a new high posted earlier Thursday morning.

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