O'Leary: Boeing will have to pay the tariffs on Ryanair's aircraft deliveries should the sector be impacted by US-EU trade war

Irish Examiner

15 hours ago

Ryanair Holdings chief executive Michael O'Leary has said that the airline will not be on the hook to pay any additional tariffs on the aircraft it has ordered as it has entered into a fixed-price agreement with Boeing which leaves the US airplane-manufacturer paying any additional charges.
Last week, the EU finalized a second list of countermeasures to target US goods worth €72bn including Boeing aircraft, automobiles and bourbon if it decides to retaliate against Donald Trump's tariff policy.
Ryanair is one of Boeing largest customers in the EU and is expecting to take delivery of 29 new aircraft from the company well ahead of the summer season next year.
Speaking to the Irish Examiner, Ryanair chief executive Michael O'Leary said their agreement with Boeing means the manufacturer will have to pay tariffs if they get imposed by the EU but he thinks it is probably unlikely.
"There's fair evidence that Trump always chickens out when it comes to tariffs, so I suspect August 1 will get delayed again. There is increasing confidence, I think, in the States, that commercial aircraft, which were exempt under 1979 Congress legislation from tariffs, will be exempt again.
"The risk we face is that the Europeans, though, will slap on reciprocal tariffs on commercial aircraft. We think that's probably unlikely, and that ultimately the Americans and the Europeans will come to an agreement, but it will be delayed in September, October of this year.
In our agreement with Boeing, Boeing pays any tariffs,' he said.
Mr O'Leary was speaking as Ryanair Holdings reported an after tax profit of €820m during the first quarter of its latest financial year - which runs from April to June - compared to an after tax profit of €360m during the same period last year representing a 128% increase.
This was driven by a 21% increase in average fares and a 4% increase in passenger traffic to 58m over the three month period.
Total revenue for the three months stood at €4.34bn, a 20% increase year-on-year, with the airline's operational costs only increasing 5% to €3.42bn.
However, Mr O'Leary said that the quarter was 'not quite as strong as it looks' as back in the period April to June 2023 the airline saw €660m in profit during the quarter before a large fall last year.
He cited the early Easter holidays in 2024 and the airline's boycott of certain online travel agents (OTAs) as a reason for the low profit last year.
He added that the majority of the fare increase so far this year was probably down to the demand around Easter holidays as well as the recovery in OTA bookings.
In the second quarter of this year, the airline is forecasting fares will go up about 7% with Mr O'Leary saying they will be 'recovering the 7% decline we had last year'.
In its outlook for the rest of the financial year, Ryanair said it expects traffic to grow by just 3% to 206m due to heavily delayed Boeing deliveries.
It expects modest unit cost inflation during this year as the delivery of new airplanes, advantageous fuel hedging and cost control measures, offset increased air traffic control charges and higher environmental costs.
While the summer season is expected to be strong, Ryanair is expecting fare increases during the second quarter to be lower than the first quarter.
However, the final outcome for the first half of the year is heavily dependent on the strength of close-in August and September bookings.
The company is confident that the 29 remaining Gamechangers in its 210 orderbook will deliver well ahead of the summer season next year.
'Boeing continues to expect MAX-10 certification in late 2025 and we're planning for the timely delivery of our first 15 MAX-10 deliveries in Spring 2027, with 300 of these very fuel efficient aircraft due to deliver by March 2034,' the airline said.
However, the airline noted that European short-haul capacity will remain constrained for the next five years to 2030 as airplane manufacturers Boeing and Airbus are 'well behind on aircraft deliveries'.
Despite these issues, Ryanair believes that it has the capacity to grow passenger traffic to 300m by 2034.
Ryanair Holdings is the larger group of companies which owns Ryanair, Buzz, Lauda Europe, as well as Malta Air.