Irish low-cost carrier, Ryanair, has warned of the potential cancellation of order for over three hundred Boeing 737 MAX jets due to tariffs imposed by the Trump administration that have drastically increased the aircraft prices.
As of today, the airline placed an order with Boeing for 330 737 MAX aircraft, with a total list price exceeding $30 billion.
Reportedly, Ryanair is currently exploring aircraft purchase options with alternative suppliers, including the Commercial Aircraft Corporation of China, Ltd. (COMAC) – a Chinese state-owned Shanghai-based aerospace manufacturer.
However, with COMAC still awaiting certification in Europe and Boeing’s primary competitor Airbus indicating that it is fully booked for the remainder of the decade, Ryanair may encounter difficulties in executing its threat.
Nonetheless, the new threat represents a drastic escalation from the earlier warning issued in April, when Ryanair CEO Michael O’Leary indicated that the airline would postpone US aircraft deliveries. In March, he stated that Boeing executives had conveyed their private assurance that the aircraft would be excluded from Trump’s tariffs.
According to the sources within the aircraft industry, Boeing and Airbus contracts do not contain any tariffs clauses, as the industry has historically worked without them. Tariffs are only applicable once the ownership of the aircraft is transferred to the purchasing airline and the contract is finalized.
Most aircraft purchase agreements feature a stipulation that mandates each party to bear their own tax obligations without specifically addressing tariffs. However, many aerospace firms are reportedly reassessing the language of their contracts for upcoming transactions, anticipating that trade uncertainties will persist for an extended period.
The latest warning issued by Europe’s largest budget airline, which is also one of Boeing’s principal clients, is the latest indicator of a possible restructuring within the global aerospace sector should Trump fail to provide exemptions for the industry from his proposed tariffs.
