Ryanair walks away from discussions on 200-aircraft order

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Irish budget carrier Ryanair has ended talks with Boeing over a potential order for up to 200 737-800s, but is not intending to open discussions with other airframers.

Ryanair is to cut back its expansion plans and reduce capital expenditure over 2011-12, building up its cash reserves for distribution to shareholders in 2012-15.

The carrier, which was trying to seal a new fleet agreement with Boeing, had already warned that it would walk away from discussions if it could not secure acceptable terms by the end of this year.

At its quarterly meeting yesterday the carrier's board decided that the negotiations for the additional 737-800s, which it wanted for delivery during 2013-16, could not be finalised before its deadline. As a result, it says, the talks with Boeing have "terminated unsuccessfully".

"While we reached agreement with Boeing on pricing for 200 aircraft deliveries during the 2013-16 period, Boeing was unwilling to incorporate some other terms and conditions from our existing agreement into this new aircraft order," says Ryanair chief Michael O'Leary.

He says that the carrier has "no plans to re-open discussions with Boeing or any other aircraft manufacturers".

Ryanair will instead revise its expansion strategy during the first quarter of 2010. This will include "much reduced" capital expenditure over 2011-12, which will provide "substantial surplus cash balances" for distribution.

"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," says O'Leary.

Ryanair is still to take delivery of 48 aircraft next year, 37 in 2011, and 27 in 2012.