Ryanair subsidiary Lauda Europe is about to switch to Boeing 737, because CEO Michael O'Leary and the European aircraft manufacturer Airbus do not seem to agree on the purchase price for an A320neo order. One thing is clear: Ryanair wants to get a cheaper price for the aircraft than for the Boeing 737 Max and Airbus does not seem to be willing to deliver at the dumping price.

The fleet policy that Ryanair has so far displayed at Laudamotion - now Lauda Europe - lacks any logic and can actually only be described as a “zigzag course”. Niki Lauda secured some machines that previously flew for Niki, but were bought by Lufthansa. The people in charge in Cologne and Frankfurt are still wondering why the crane even tied the Airbus A320 and A321, some of which were already old, to their legs.

The strategy was probably followed that if the crane cannot eat “the Niki”, then no one should have the former Air Berlin subsidiary. The strategy didn't quite work from the start, because not all lessors sold to the crane. So it came about that some machines found a new lessee with Level Europe (at that time Anisec). However, the vast majority of the Niki fleet could be bought by Lufthansa. The Korneuburg Regional Court then ruled that the buyer of the "estate" of the Air Berlin subsidiary can rent the aircraft at "market conditions".

Niki Lauda could have organized other aircraft with leasing companies, but he really wanted the A320 and A321 that were owned by the crane. The possibilities of the free market did not really play a role for Niki Lauda, ​​because it was about getting his thick skull through with the friendly support of a court order against Carsten Spohr. In other words, it was a bit of a "personal matter" that was just about the principle. The three-time Formula 1 world champion also had absolutely no interest in investing significantly in the fleet. A few slides over the Air Berlin lettering and voila, a ugly appearance of the A320 and A321 was created. It didn't matter that the red paint was already heavily faded and some of the cabins needed a fresh-up. Time would have been enough, even if Lauda put it differently. Something completely different was the real cause.

Refloat to Boeing 737 has already "slept through"

Lauda needed a flying Laudamotion to get Michael O'Leary on board and after he had taken over the 75 percent majority, the new cabs and paintwork should pay for it. Is cheaper, at least from the point of view of Niki Lauda. At Ryanair, Michael O'Leary and nobody else determines what is customary and what is not. What Niki Lauda and Andreas Gruber negotiated with Lufthansa as the majority shareholder before Ryanair Holdings plc joined the company was suddenly completely overpriced and the dispute, which was carried out in public and ultimately ended up in court in London, was quickly perfect. An agreement was reached on the middle and the machines were gradually returned.

Now would have been the right time for Laudamotion to switch to the Boeing 737. For Ryanair it would have been easy to make this available, but this opportunity was not taken. Instead, a hodgepodge of aging A320s was organized by various lessors. The former managing director Colin Casey once said in an interview that the “new fleet” would be half the price. Since this Ryanair manager is an extremely skilled and tough negotiator, that will be true. But he and his co-managing director Andreas Gruber repeatedly indicated an A320neo / A321neo order. There were talks with Airbus, but Airbus is not Boeing and the Europeans have not accepted Michael O'Leary's ideas of dumping in the past.

Boeing has to sell the warehouse

What is the Irishman doing with the Airbus offer? Exactly what a private person does when buying a car: You go to another dealer and try to get a cheaper offer and with that you go back to the first dealership. In the specific case, it is Airbus and Boeing.

The Americans are simply in a different position, because they have numerous completed 737-Max-200s, even in Buzz and Malta Air liveries, standing around in the yard and Ryanair is putting a lot of pressure on the delivery delays. Because of this, Boeing had to pay a lot for the lowcoster, but the Americans simply cannot afford O'Leary to refuse acceptance and prefer to buy 100 or even 200 machines from the Neo series. On top of that, Boeing has masses of ready-made 737-Maxs for which there are no longer any buyers. So you can - from re-registration - deliver from stock and due to a lack of demand, Ryanair could be able to turn the price properly.

Airbus was hit hard by the corona pandemic, as was Boeing. But you are in a much better position, because the Europeans do not have a Max-Misere on their necks and do not receive hundreds of cancellations for their Neo series (even before Corona). To put it bluntly: Airbus does not have to get involved in price dumping that could lead to below the prime costs, because Boeing cannot afford to lose the Ryanair Group as a customer and has a full warehouse, but no buyers.

How does this affect Lauda now? Very simple: Michael O'Leary himself has already explained it: If you can't get green with Airbus in terms of price, then the A320 experiment in the Ryanair Group is over. The used aircraft are gradually being returned to the Lessoren and Lauda Europe is being converted to the Boeing 737. It's not difficult either, because Malta Air is in the same office in Birkirkara and they are familiar with this pattern. In any case, the two companies already share a lot more than just the mailbox and the premises. Then you have two Maltese airlines with Boeing 737 in the group. The group also has a Polish, an Irish and a British ...

Airbus is too expensive for Michael O'Leary

“Lauda has a fleet of used, leased A320s. We'd love to replace that with a fleet of A320neo or A321neo, but only if prices can keep up with Boeing's. And if it can't do that, Lauda will get rid of the Airbuses. Ultimately, Lauda will also be a Boeing operator, ”said Ryanair Group CEO Michael O'Leary during the WTM in London.

Initially, the head of the low-cost airline was really keen to reduce its "dependency on Boeing", but now it seems to have come to Dublin that the small Airbus sub-fleet causes significantly more avoidable work than can actually be drawn from it. It would only make sense if the A320 fleet grew rapidly and leveled off at 100 to 150 machines. Corona threw a stitch through the bill, because all used aircraft that could still be canceled have already been canceled and cheaper rates and sometimes shorter terms have been agreed with the lessors. In other words: Michael O'Leary wants to get rid of the used leased aircraft, some of which are getting on in years. Incidentally, these also raise the average age of the otherwise young corporate fleet.

We have been in talks with Airbus - at least officially - for 18 months. So far, no one has come up with a green branch, but Boeing duly paid compensation, which in the middle of the Corona crisis did not make the numbers look that bad and before you risk Ryanair no longer accepting the machines, the Americans will with a high probability, literally, let your pants down even further. Especially for a reorder that Michael O'Leary has repeatedly placed in the room himself. So it seems that a bigger Max order is within reach, but a contract with Airbus is as far away as Pluto is from Earth.

Days of the Lauda livery are numbered

Lauda was crushed as a separate brand under the guise of "Corona" and the Austrian Laudamotion was replaced by the Maltese Lauda Europe. The “two-brand strategy” failed and the planned multi-brand presence (Ryanair, Buzz, Lauda and Malta Air) was canceled. The external appearance for the customer is uniformly Ryanair and the "operated by" is often not even noticed anyway. In the case of Lauda, ​​maybe because higher quality seats are installed and not the typical “Ryanair plastic”.

“I am still confident and still optimistic that we can reach a deal with Airbus. The challenge, however, and this is one for Airbus, is that they must be able to match Boeing's prices. We're a one-trick pony. We choose the aircraft that gives us the lowest cost per seat, ”said Michael O'Leary. “Airbus faces two challenges when it comes to getting a deal with us. For one, the Neo was a very successful program before COVID anyway, so the number of reorders at higher prices is much longer than with Boeing. In many ways, we are a victim of the success of our partnership with Boeing. To be honest, we have lower prices at Boeing than Airbus offers for reasons that I do not understand ”.

The existing used fleet at Lauda Europe is to be replaced in any case. At the moment, more likely with Boeing machines. It is extremely unlikely that Airbus will surprise the entire industry and possibly go below the prime cost for a large order from the Ryanair Group. This should also number the days of the Lauda livery, because Malta Air and Buzz also did without repainting. Some Max will wear the respective color dress, but then these are "special liveries".

Another question then becomes exciting: Will Ryanair pay the Lauda A320 pilots the type rating for the Boeing 737 or is this considered to be “personal contribution” and whoever cannot or does not want to pay for it himself will then be dealt with by pilots from the group who will work elsewhere not needed, replaced? In view of the history that Ryanair has revealed via Laudamotion in Austria, this idea is by no means absurd.