Ryanair Secures Compensation For Boeing 737 MAX Groundings

Ryanair has allegedly been compensated by Boeing in lieu of the grounding of the 737 MAX, of which the airline as 135 on order. The agreement is thought to involve the waiving of money already owed to Boeing by Ryanair.

Ryanair airliner in flight
Ryanair has edged for compensation since the MAX grounding on March 13th. Photo: Ryanair

Ch-Aviation reports that the Irish airline received ‘millions of euro’ following a round of talks with Boeing. The airline had previously hinted at its demand to be compensated for delays of the delivery of the MAX aircraft. It had hoped to begin using the type in April of this year.

Delivery delays

Ryanair boss Michael O’Leary has already part-attributed the slump in early-year profits to the 737 MAX’s grounding. The carrier expects a similar downturn later this year too due to Brexit uncertainties and stiff competition.

The airline was forced to delay delivery of the first of its 153 aircraft last month, following the worldwide grounding of the type in March. The grounding followed two accidents suspected to be caused by faulty anti-stall computer software. The delays are thought to have cost Ryanair one million summer passengers: a profit loss of estimated at $8m.

Ryanair said earlier this month that the delayed deliveries of the MAX had led the airline to ‘not see any meaningful cost benefit until 2021‘. As a result the airline froze pre-delivery payments of the $22bn order with Boeing.

Deal struck

Neither Ryanair nor Boeing were prepared to comment about the nature of the agreement. However, O’Leary admitted earlier this week to be in talks with Boeing about possible compensation to make up for a loss of revenue.

Ryanair was due to receive its first Max in April and take five more during the 2019 summer season.

3 Ryanair airlines on apron of airport
The agreement is likely to include a discount of the money owed by Ryanair to Boeing. Photo: Ryanair

O’Leary has not been reticent about his intention to urge Boeing to cover lost profit. John Mulligan writing for Independent.ie quoted O’Leary as saying last week:

I’m sure we will work something out with Boeing. Whether that’s compensation or something on the price of the aircraft – not sure yet.’

According to Mulligan the deal is likely to have included a hefty discount off of the $22bn MAX order value. Simple Flying have reached out to the airline for further comment, but have so far received no reply.

Flood gates

Ryanair is one of Boeing’s biggest customers and the world’s largest operator of 737-800s. Five years ago the airline ordered 135 737 MAX 200s with an option for 75 more. The first batch of aircraft – all with a high-density seat configuration – was slated for delivery in the summer of this year.

Ryanair airliner on apron in rain
Other companies may vie for compensation in the wake of Ryanair’s success. Photo: Ryanair

The agreement reached is certain to set a precedent for other airlines to approach Boeing with similar demands for compensation. Norwegian and AeroMéxico have both hinted at their intention to squeeze the troubled manufacturer for some form of compensation.

Meanwhile, Ryanair’s Michael O’Leary continues to have ‘utmost confidence’ in Boeing’s 737 MAX despite his postponing the delivery of the first five on order.

Depending on the outcome of the re-certification of the type by the EASA, O’Leary expects to have his MAXs flying by winter. He also expects to have 50 of the jets in service in time for summer 2020, according to The Times.