Ryanair walks away from jet order talks with Boeing over price dispute

Yahoo Finance's Ines Ferre talks about Ryanair, Boeing's biggest 737 max customer outside the U.S., walking away from a new jet order after the companies failed to come to a price agreement.

Video Transcript

- The declines for Boeing shares accelerating in the session. Now off about 2 and 1/2%, after a major customer ended talks to purchase its 737 Max 10 Jets. Let's bring in the Yahoo Finance's Ines Ferre for the very latest. We've given the jet away there. It's Ryanair, of course, the big customer. One of their biggest customers. What's behind the dispute?

INES FERRE: That's right, and this is a big deal because Boeing is-- Ryanair has or Ryanair is Boeing's biggest customer outside the US, I should say. But basically, Ryanair is walking away from talks for the new order of the 737 Max because of pricing.

Now this is interesting. A little bit of background here. The 737 Max competes with Airbus' A320. And Airbus gained some market share during the grounding of the 737 Max jet. Now Ryanair last year had announced that it was buying 75 of the 737 Max and that was seen as a vote of confidence by analysts. That Boeing was getting back on its feet. Its biggest customer was ordering its planes.

Well, now these talks are related to the 737 Max 10's, its newest, biggest variant of the 737 Max. And analysts have been watching this deal as sort of a bellwethers to how quickly Boeing can recover from its order backlog. The pricing gap though, being a bit too big right now.

So we did reach out to Boeing for a statement. We have yet to hear back from them. But they did give a statement to "Reuters" saying, Ryanair is a long-standing partner. We continue to be disciplined and make decisions that make sense for our customers and our company. Ryanair has said, we're disappointed we couldn't reach an agreement. We have a disciplined track record of not paying high prices for aircraft.

The big concern here, again, is this market share that Airbus has been gaining, because Boeing has gained more orders since the ungrounding of the Max jet, but Airbus' market share of the 8320 versus the Max is 60% of market share. So that is seen as a real critical threshold by analysts because that way, the company can lower production costs and reduce prices.

So Airbus having a leg up, so to speak, when it comes to the market share. And that's why it's so critical really with this Ryanair, this deal that has fallen through for now.

- Yeah, that's critical. You got Jefferies out with a note talking about potential delays to the 787 Dreamliner, as well. They say an incremental $4.6 billion in terms of headwinds for Boeing there. So it's increasingly clear as to why they're looking for any sort of boost of confidence here, not coming from the likes of Ryanair. Ines ferre bringing us the latest on that front. I appreciate it.