Airbus Retrenches, Rejects Ryanair’s Advances
Should anybody harbor any doubts, two recent events confirmed that the mid-decade airline-order boom has ended: Airbus announced A320 production cutbacks and Ryanair has come looking for bargain-basement prices for single-aisle airplanes. Airbus now plans to cut single-aisle production from 36 to 34 a month starting in October and possibly to a lower rate later. Twin-aisle production remains at 8.5 per month, despite a previously planned increase. Although the company aims to deliver about the same number of airplanes it shipped last year, “I do not exclude further cuts,” said chief executive Tom Enders.
But as Airbus “manages” build rates following delivery deferrals and cancelled orders, it hardly blinked at Ryanair’s request for proposals to supply huge numbers of new aircraft. This month, the Irish low-cost carrier told AIN it had entered “early negotiations” for 200 to 300 new single-aisle aircraft for delivery between 2012 and 2017.
Knowing how Ryanair operates–with its proclivity for ordering extensive capacity at discount prices while simultaneously re-negotiating outstanding orders–Airbus quickly rejected the advance, at least publicly leaving any deal making to its U.S. competitor.
Since 1998 Boeing and Ryanair have staged numerous, sometimes overlapping order announcements, which if counted separately would have covered almost 540 Boeing aircraft. In actuality, Ryanair placed firm orders for 338 airplanes, some of which the airline received at lower prices than originally agreed upon after renegotiation during subsequent order proceedings.
“We don’t plan a sales campaign with Ryanair, which would be very expensive and very time consuming,” concluded Airbus chief commercial officer John Leahy.