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Old 16th Apr 2013, 08:38
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Stall Inducer
 
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There may be more reasons to the extension of the RFP's. More a case of missing the boat to Ryanair than 'masters of negotiation' from the air n there blog :-

Michael O'Leary was on good form recently when announcing his airline's order for 175 new Boeing 737-800s, of which 75 are likely to be for fleet replacement and 100 for further expansion. This comes at a time when Easyjet is yet to find the right price in talks with Boeing and Airbus and as O'Leary puts it "Europe's flag carriers are getting significantly smaller".

Both things are significant.

Firstly, with Ryanair having taken up most of the slack on the existing 737 production line pending the time in 2017 when the enhanced MAX versions replace it, Boeing is no longer under such intense pressure to do a deal simply to keep deliveries moving and the plants and people occupied. As on cruise lines and many other businesses, few customers, if any, pay the actual list prices . In this instance it will have been worth Boeing's while to have offered Ryanair a very good deal to keep the lines flowing smoothly. The costs and organisational difficulties of substantially slowing them down and then ramping them up again are enormous. Now they don't need to offer anyone else a similar one , unless the prospect of recapturing Easyjet from Airbus makes it strategically worthwhile in the long term . In all such things , one more order for you means one less for the competition so there is always a double whammy in prospect.

Pricewise this could all leave Easyjet in a difficult and exposed position. Airbus will also know that they probably don't now have to cut a deal with them to the bone. As result neither manufacturer is likely to offer the orange people as good a deal as Ryanair obtained. That means that Easyjet's cost of ownership of its next batch of aircraft would be higher than Ryan's for each of the ten plus years that they are likely to remain in the fleet . Reaction in Easyjet's boardroom at being beaten to the draw may well be "Ouch".
That would make sense with rumours of pushing the replacements back to 2018.

Last edited by Stall Inducer; 16th Apr 2013 at 08:44.
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