Will EU Tariffs Force Ryanair to Cancel Boeing's $40 Billion 737 MAX Order?

The potential for a renewed US-EU trade war is casting a long shadow over the commercial aviation sector.

Aircraft manufacturer Boeing is identified as one of the single biggest losers in this escalating dispute. The European Union (EU) has a substantial retaliatory tariff package ready to deploy against US imports. This package specifically targets US-made aircraft.

The Threat of EU Retaliatory Tariffs

The EU’s prepared countermeasures are a response to recent US threats of new duties on European goods. The EU has a suspended retaliatory package targeting up to €93 billion ($101 billion) in US imports.

American aircraft, including those from Boeing, are high on the list of targeted industrial goods. The re-imposition of tariffs on aircraft would immediately raise the cost of new jet deliveries to European airlines. This would directly impact Boeing’s largest European customers.

This situation is reminiscent of the long-running World Trade Organization (WTO) dispute. That disagreement involved subsidies given to both Boeing and its European rival, Airbus. The US and EU had previously agreed to suspend those tariffs in 2021.

Ryanair's Critical 737 MAX Order

The most significant financial exposure for Boeing lies with its biggest European customer, the Irish low-cost carrier Ryanair. Ryanair has placed a massive Ryanair 737 MAX order for up to 300 Boeing 737 MAX 10 aircraft.

The list price value of this landmark deal is over $40 billion (€36.3 billion). Deliveries for this order are scheduled to begin in 2027 and run through 2033. The order is crucial for Ryanair’s ambitious airline fleet expansion plans. It aims to grow its annual passenger traffic significantly by 2034.

The Direct Cost to the Airline

Ryanair CEO Michael O’Leary has been vocal about the potential consequences of a Boeing EU tariffs scenario. Tariffs are typically due when the aircraft ownership transfers to the purchasing airline. This is often when the contract is finalized.

• A potential 25% import tariff on US-made aircraft could add billions to the purchase price.
• This increase would significantly affect Ryanair’s famously scrupulous balance sheet.
• The airline has threatened to cancel or reassess its current Boeing 737 MAX 10 orders if the tariffs materially affect the price.

Losing this order would be a major Boeing financial risk. It would be a significant blow to the manufacturer's already strained order book and production schedule. The cancellation would force Boeing to find new buyers for a large number of aircraft.

Industry Impact and Alternatives

Trade disputes introduce immense uncertainty into global supply chains. The commercial aviation trade dispute affects more than just the final assembly line.

• Airlines: European carriers face higher costs for new aircraft, which could stall fleet expansion and modernization plans. This could lead to higher ticket prices for consumers.
• Manufacturers: Boeing's market share in Europe is directly threatened. The company's rival, Airbus, is headquartered in the EU and would be largely shielded from these specific EU tariffs.
• Global Competition: The threat of tariffs pushes European airlines to consider alternatives. Ryanair's CEO has mentioned looking at China’s COMAC C919. However, the C919 is smaller and currently lacks European Aviation Safety Agency (EASA) certification.

This transatlantic trade dispute underscores the fragility of international commerce. It highlights how political decisions can quickly translate into billions in commercial risk. Aviation stakeholders are closely watching diplomatic efforts. They hope to avoid the reintroduction of duties on essential capital goods like commercial aircraft.

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