http://www.londonstockexchange.com/LSECWS/...&source=RNS



Apologies if the link doesnt work.

Sounds smart. I mean, business is softening, demand is softening, profits are turning into losses, so obviously the smartest thing is to grow your fleet even more and spend even more money on those planes...

FT.com is reporting that Ryanair is in talks to purchase 300-400 aircraft. The COO, Michael Cawley, said he expects Ryanair to place an order in 18-24 months. He suggested that a mixed fleet of Airbus and Boeing could be possible.

But we are bound to recover eventually. And when it does, FR will be well poised for growth because they picked-up assets in a buyers market. People thought they were crazy when they ordered 100 737-800 just four months after 9/11, too.

"Airbus snubs Ryanair over discounts

By Kevin Done in London

Published: February 4 2009 23:23 | Last updated: February 4 2009 23:23

Airbus has snubbed an effort by Ryanair, the low-cost airline, to draw it into a bidding contest against Boeing for the carrier’s next multi-billion dollar order for several hundred short-haul jets.

The European aircraft maker is unwilling to contemplate the scale of discounts being sought by Ryanair, which has established a reputation as one of the most aggressive negotiators of low-cost supply deals in the global aviation industry.

Airbus’s reluctance to enter the preliminary bidding for the Ryanair order is highly unusual given traditionally fierce competition between the world’s duopoly manufacturers of big commercial jets above 100 seats.

The two group’s vie for the annual bragging rights as the world’s leading commercial aircraft maker – a position held by Airbus – and the order volumes from Ryanair, if not the profits, represent a very big prize given that the Irish carrier is poised to become Europe’s biggest short-haul airline measured by passenger numbers.

This week Ryanair said that it was in early talks with Boeing and Airbus about an order for 300-400 short-haul jets, one of the biggest purchases of new aircraft.

Michael Cawley, Ryanair deputy chief executive and chief operating officer, said that he expected the group to place the order within 18-24 months to take advantage of the rapidly weakening commercial aerospace market.

Michael O’Leary, Ryanair chief executive and key senior colleagues have visited Airbus headquarters in Toulouse to outline their plans, but the European group, the commercial aircraft division of EADS, has told the airline that it is not interested at the prices Ryanair is seeking.

John Leahy, Airbus’s chief commercial officer, said: “We are not in discussions with Ryanair about aircraft. That is on the record. We don’t have plans to enter a sales campaign with Ryanair, which would be very expensive and very time consuming.”

The Irish carrier is seeking to repeat its coup of six years ago, when it placed its previous biggest order for 100 aircraft and a further 50 options in January 2002, close to the bottom of the last aviation recession.

It was the biggest order Boeing had ever received for its 737 jets, and Ryanair secured one of the largest discounts ever agreed by the US aircraft maker, which was then desperate for new orders.

Boeing and Airbus have said that they expect new orders to plunge this year to roughly a quarter of the peak combined industry level of more than 2,800 new orders won in 2007.

Ryanair has a single type fleet of 181 Boeing 737-800s. This is due to rise to 292 by March 2012, based on its existing firm orders.

It is looking to secure a delivery stream through the next decade to replace older jets and to allow for ongoing expansion.

Airbus is reluctant to enter sales campaigns that have little prospect of success.

EADS North America announced last week that it was withdrawing from the contest to supply replacement aircraft for the US presidential Air Force One fleet late in the next decade.

Copyright The Financial Times Limited 2009"

With this logic I suppose Airbus will no bid the next tanker competition. They already said they are no bidding the new AF-1. New proposal funds must be hard to get these days.

Airbus may very well fear FR will do to them what IB did to Boeing - get an insanely low bid in the belief that you had landed the deal, only to have the "incumbent" match (or even beat) it and sign the order.

While people legitimately note that fleets of 100 or even 50 planes offers enough "depth" to make adding a new type a "non-issue", the fact is with an eventual 300 737-800s in their fleet, FR adding anything else will not be as efficient as adding more 738s. And depending on how FR's current deliveries fall, it is quite possible that the bulk of this order could be delivered as the model that replaces the 737 in Boeing's line-up.

I wouldn't be quite so sure on that. It appears that from global experience with the true LCC's (and a few carriers that are not), that operational costs between the B737-800 and A320 families are pretty well 'line-ball'. Looking at carriers such as QF/JQ which have equivalent or similar numbers (QF - B737's and JQ with A320's) .. they have the perfect 'benchmark' for comparison. This type of environment does not exist in too many airlines.


Not unless FR's current order / delivery schedule takes them past 2020 ~ which is when Boeing is 'looking' at EIS for their next-gen frames (as reported a few weeks ago).

In fact, MOL's "brilliance" might actually be resting on the ability to 'time' last-of-model deliveries, in order to achieve further cost savings.

Frankly, I think it is great that Airbus has been smart enough to say "no thanks" to FR. Why ?
- FR is a committed Boeing customer.
- Little value in being pulled into a 'bidding war' for something that will in all probability go to Boeing.
- Boeing will now be forced to draw / declare the 'recession' barrel-bottom price (an eventual advantage for Airbus).
- It goes a long way to removing the facile comments that "Airbus will sell at any price".

Perhaps MOL might have to go and sweet-talk some new friends in China ?

Perhaps EADS is abandoning its "market share" approach to business and actually looking at the bottom line? All those charges they took for the A380 and A400M (with more to follow on the transport) have had to impact the share price. Remember, there are other shareholders now, like the Russians and the middle east sovereign wealth funds who aren't in this game for the prestige.

Frankly, I don't think this is the last of it. MOL needs two bidders to play his game. Airbus will be back in it....

But far more LCCs and mainline airlines have adopted a single family approach to their narrowbody fleets and more airlines that did operate mixed modern Airbus and Boeing narrowbody fleets are going "sole source" with replacements.