Ryanair to ask Boeing to 'eat' any EU tariffs in jet trade war

LONDON (Reuters) - The head of Ireland's Ryanair RYA.I on Tuesday urged the United States and European Union to pull back from a tariff war over aircraft subsidies and said he would ask Boeing BA.N to "eat" any counter-tariffs imposed on the U.S. firm by the EU.

The World Trade Organization (WTO) is expected to give the green light this week to U.S. tariffs on billions of dollars of European goods, including Airbus jets, in a move likely to be mirrored by European tariffs on U.S. planes and goods next year.

"The U.S. can't afford to have a trade war," Ryanair Group Chief Executive Michael O'Leary, whose company's main airline is one of Boeing's BA.N largest customers, told Reuters after speaking at a Reuters Newsmaker event.

“Boeing is one of its biggest manufacturers and biggest exporters, but something needs to be resolved so I think like most airlines we sit there and hope common sense will prevail at the end of the day, but we don’t know how it plays out,” O’Leary said.

The WTO is expected to publish in the coming days a report by an arbitration tribunal opening the door to U.S. tariffs due to illegal European subsidies for Airbus AIR.PA.

A similar WTO report backing EU tariffs in a parallel case over Boeing subsidies is expected early next year.

Both sides have won partial rulings in their favor during the 15-year-old trade spat, the largest handled by the WTO.

“Ultimately I suspect it gets settled, because I am not sure the aviation industry either here in Europe or the U.S. can survive a tariff war between Boeing and Airbus - there are only two suppliers,” O’Leary said.

He suggested a greater burden lay on the EU to resolve the dispute since it sells more planes to the United States than the other way round.

Asked how Ryanair would respond to any EU tariffs on Boeing jets, O’Leary said, “It depends on the size and scale of the tariffs – our starting position is we want Boeing to eat the tariffs.

“If (tariffs) were to significantly increase the cost of aircraft then I think we have to look at staggering or delaying some deliveries. Some of that will depend on what the availability of aircraft is like over here if that were to happen and what Boeing does and the U.S. does in response.”

Boeing was not immediately available for comment.

Any delays due to the tariff dispute could pose a new threat to Ryanair’s growth plans as the airline emerges from the grounding of Boeing 737 MAX jets following two fatal accidents.

Ryanair has cut its fleet growth forecast for the summer of 2020 to 30 Boeing jets from 58 and has said it hopes that deliveries will be back on track by the summer of 2021.

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