Ryanair Decides Not to Buy 200 Boeing Planes
However, the good news for Boeing is that the end of negotiations with Boeing on these 200 737s does not currently change its plans to buy 112 of them for delivery between 2010 and 2013. Ryanair plans to distribute the $1.4 billion in cash freed up by the decision not to buy those planes to pay dividends to shareholders.
This could signal an end to Ryanair's traditional growth strategy. That's because the relatively low barriers to entry into the low cost carrier market and Ryanair's success there has attracted new competitors like EasyJet. This new competition makes it harder for Ryanair to achieve the kind of rapid growth and capacity expansion it enjoyed in the past.
This is likely to be good news for Ryanair's shareholders in the short-term and bad news for Boeing's. On the other hand, if over the next few years Ryanair decides it is willing to buy these 200 aircraft at lower prices, Boeing could benefit.
Peter Cohan has no financial interest in the securities mentioned.
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