Ryanair scraps talks on mutli-billion aircraft order

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The Independent Online

Low-cost airline Ryanair said today it had pulled out of talks with Boeing over a potential multibillion-dollar order for up to 200 new aircraft.

The decision will result in a major change in strategy for the airline, which has no plans to reopen discussions with other aircraft manufacturers.



While a separate deal for the delivery of 112 Boeing 737s over the next three years will still take place, Ryanair said it will reduce growth and capital expenditure beyond 2012 to maximise returns to shareholders.



Ryanair's chief executive Michael O'Leary said: "We regret that our prolonged negotiations with Boeing have failed to reach a mutually acceptable conclusion.



"While we reached agreement with Boeing on pricing for 200 aircraft deliveries during the 2013/16 period, Boeing were unwilling to incorporate some other terms and conditions from our existing agreement into this new aircraft order."



The airline, which currently operates a fleet of 202 Boeing 737s, said 48 new planes due next year, followed by 37 in 2011 and 27 in 2012, should sustain its strong traffic growth in the medium term. The talks with Boeing covered the possibility of new planes for delivery between 2013 and 2016.

Ryanair plans to brief shareholders on its revised strategy in the new year.



Mr O'Leary added: "I believe it is appropriate to return these surplus funds to shareholders, if we cannot use them to purchase aircraft on terms which enable us to meet our demanding return on capital targets.



"In the meantime we will continue to work with our partners in Boeing on the 48 deliveries which Ryanair is scheduled to take in 2010 and perhaps in future there may be other opportunities for Ryanair and Boeing to work together to our mutual benefit during the period from 2013 onwards."



Mr O'Leary has previously expressed interest in launching a long-haul airline, although it is likely to be separate from Ryanair.



The budget carrier has a track record of achieving attractive deals with manufacturers, most notably in 2001 when it bought new planes from Boeing at a time of industry turmoil following the September 11 terrorist attacks.

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