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Boeing gets 737 MAX order boost from Ryanair: sources

PARIS (Reuters) - Budget giant Ryanair is set to place a hefty order for up to 75 additional Boeing 737 MAX jets, throwing a commercial lifeline to the embattled U.S. planemaker after regulators lifted a 20-month safety ban, industry sources said.

FILE PHOTO: Ryanair planes are seen at Dublin Airport, following the outbreak of the coronavirus disease (COVID-19), Dublin, Ireland, May 1, 2020. REUTERS/Jason Cairnduff/File Photo

Europe’s largest low-cost carrier has been negotiating for months with Boeing over whether to exercise an option for 75 jets, lifting its total MAX order as high as 210 aircraft, as part of a compensation deal for delays caused by the grounding.

But a deal for dozens of jets only became possible once U.S. and European regulators lifted the almost two-year flight ban imposed in the wake of two fatal crashes: one of a number of eye-catching deals Boeing is seeking to overcome the crisis.

Ryanair and Boeing declined to comment.

Shares in the U.S. planemaker rose around 2.8%.

The MAX, an upgraded single-aisle jet, was grounded in March 2019 following crashes in Indonesia and Ethiopia in which a total of 346 people died, spawning multiple investigations.

Regulators have begun clearing the aircraft for flight after revisions to cockpit software and pilot training.

An order from one of Boeing’s largest customers is a pivotal moment in efforts by the company to rehabilitate the MAX, once its fastest-selling model. Ryanair has a record of striking deals to lock in low costs when its bargaining power is highest.

Each MAX is worth about $125 million at list prices, making a deal for up to 75 jets worth as much as $9 billion to Boeing on paper, helping to stem a haemorrhage in cash caused by a stockpile of 460 undelivered MAX jets outside its factories.

DISCOUNTS

In practice, jets typically sell for closer to half their catalogue value, traders say. Ryanair is expected to win discounts closer to two thirds in return for a headline-grabbing relaunch of the MAX that helps fill gaps left by cancellations.

Aviation photographer Michael Kelly tweeted a picture of a Boeing company private jet landing in Dublin, fuelling speculation that Ryanair bosses would travel to the United States for the announcement, echoing a previous ceremony.

Boeing is also negotiating with airlines including Southwest and Delta, industry sources have said.

Alaska Airlines last month agreed to lease 13 Boeing MAX jets.

Ryanair’s order may, however, be overshadowed by new European Union tariffs on Boeing jets, bringing a long-running trade row to a head in the midst of the U.S. electoral transition.

The EU imposed the tariffs last month after a green light from the World Trade Organization, echoing WTO-backed tariffs imposed by the United States on Airbus jets last year.

Both sides have called for negotiations, while refusing to rule out further increases in the tariffs.

Ryanair, meanwhile, has said it expects Boeing to absorb the cost of the 15% European tariffs on planes already ordered.

Separately on Wednesday, American Airlines staged the first post-grounding demonstration flight.

Reporting by Tim Hepher and Conor Humphries; Editing by Elaine Hardcastle and Mark Potter

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