That may be true, but then again we don't know how aggressive Ryanair was with their offer. They certainly tend to be, especially when they smell blood...
No, we do not know that. FR are indeed very aggressive when it comes to getting good deals.
I will say that I find it interesting that this site frequently congratulates DL for doing exactly the same thing WRT aggression, albeit without any personality. I mention this as MOL is exceptionally good at this sort of thing. FR's purchasing record is something most other companies do envy. More below...
Francoflier wrote:There is no indication that Boeing is unrealistic with prices.
It really depends on how you mean that.
In terms of general product competiveness? In MOL's position, anything above 60% AB last and best is not acceptable. BCA also need to ditch their resale restrictions. They simply have no leverage in the NB market and should take whatever price an airline is willing to offer.
In terms of what can BCA afford to offer, I would then agree with you. They are in a very sticky wicket where they desperately need orders like FR's. But they also need to do that above cost.
Francoflier wrote:My opinion here is that FR was trying to get Boeing to sell at a loss, or something so ridiculously low that there was simply no point in Boeing even manufacturing these frames.
MOL will not approve a sale that is significantly above cost, obviously. And scuttlebutt on the street —I know, worth the paper it is written on— is that the real issue here is that MOL does not feel BCA are being upfront or even honest/realistic about what those costs are, and that is the issue stalling this out more than anything else.
It's standard practice for FR to walk in a negotiation room like they're the only one in the World buying airplanes, but these days I just can't understand their strategy...
Because as far as BCA are concerned, they are. Boeing altogether will not be revenue positive this year and without significant improvement over those estimates, their cash position will not be sustainable. BCA by itself is a financial trash fire right now.
Orders for 100+ narrowbodies are not uncommon anymore, and as much as Boeing would like to sell the MAX10, they might just as well sell any other variant of the same plane instead, which will be produced on the same line, at a higher profit per frame. On the other side, Airbus has no incentive to lower prices at all on the NEO, much less the 321, and they seem to have little patience for Ryanair at the moment.
What's FR's leverage here?
Generally, yeah. But these days they are uncommon enough for BCA. When we take out credits and discounts, the profitability of the MAX becomes more than a little unrealistic over the next half-decade. Things like COVID and the ongoing costs of restarting that line do not help either.
As well, they are not delivering any other products from Commercial. They really are on their back feet here.
So off hand, I would say that part of FR's leverage is that they are the only large offer BCA are fishing for apart from the dubious possibility of QF. I know we expect them to get that, but that still could end up not happening.
Another major thing FR has for leverage is MOL himself. Again, this site does not like to be candid about it, but the man is exceptionally talented at this sort of thing. He did not become a billionaire by subsidizing BCA's —or AB's— production inefficiencies. Also worthy of note is the fact that he has been in this game a lot longer than anyone currently employed in BCA's sales teams. It is likely that he knows more about their operations and what their cost structures than they do.
So while when you say he 'smells blood,' that is likely true.
But I would say that more than anything, what he really smells is arrogance. Turning that upside down is very likely something he would consider to be a homefield advantage.
I am not truly sure how much that works out to for leverage, but I am certain that it is not nothing.