Major Airline Makes Big Threat Over Tariffs
Amid a potential United States-led tariff war, one major airline issued a significant threat to avoid American airplane manufacturer Boeing.
On Thursday, May 1, Ryanair threatened to cancel orders for hundreds of Boeing aircraft if a trade war sparks materially higher prices. The company even suggested it would take its business elsewhere, potentially to Chinese manufacturer COMAC, according to a report from Reuters.
A source told Reuters the threat may be difficult to follow through with considering COMAC isn't yet certified in Europe while fellow rival Airbus maintains it's sold out through the rest of the decade.
Ryanair chief executive Michael O'Leary said the tariffs "could threaten 330 Boeing 737 MAX aircraft that his airline has on order, which have a list price of more than $30 billion," according to Reuters.
"If the U.S. government proceeds with its ill-judged plan to impose tariffs, and if these tariffs materially affect the price of Boeing aircraft exports to Europe, then we would certainly reassess both our current Boeing orders, and the possibility of placing those orders elsewhere," O'Leary said.
It's a change of tone from O'Leary, who said in March that Boeing executives had privately expressed confidence that aircraft would be exempted from the tariffs. However, a Reuters source claimed contracts with Boeing and Airbus don't include a provision for tariffs while major airplane manufacturers are "reviewing the wording of contracts for future deals on the assumption that trade turbulence will remain for some time."
In the letter O'Leary admitted the Irish airline hasn't had discussions with COMAC since 2011, but would "of course" consider the Boeing and Airbus alternative if they were 10-20% cheaper.
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