The cost of production of the MAX 10 is irrelevant to price negotiations.
I do not doubt that BCA feel that way. But in a negotiation like that, BCA can only make an offer. FR is the decision maker here. So if MOL decides it is relevant, it is.
I do not think he is out to screw BCA, FWIW. He probably just will not settle for any deal for more that WN or IAG paid.
The only thing that matters is how much FR needs these airplanes vs. how much Boeing wants to sell them.
I think that is where this gets interesting. With an average fleet age of only 8 years, FR are in no rush to replace anything. Theoretically, MAX 10s add capacity. But they have already MAX8-200s on the way. While more is always better when an airline makes its money off ancillaries, the difference between those two will not be a show stopper for FR.
I understand that MOL does not want to overpay for anything, but when I need a carton of milk at 11pm, I'll pay what the local convenience store wants me to pay because it's the only place I can get it from at that time, regardless of whether it costs half the price at the local supermarket or what it cost the producer to make...
Not that I think Boeing is gouging prices here, but they have no interest to sell at zero cost or at a loss either. Their cash position may be trash, but there is a limit to how bad a 'loan' you can take to fix it before it just makes it worse.
The MAX may be a troubled program, but they still have around 4000 frames to deliver. It is likely that demand will pick up before they finish assembling them.
I do not disagree with that as a concept. The real question here is what is FR's actual need? This order is more WN style strategic top-up than AA panic ordering 400 planes because they just noticed how old their MD-80s were. They want the milk, but they are not thirsty enough to need
it, and may decide they will deal with it later. BCA OTOH, have milk that's going to expire tomorrow.
I agree with you that they are not likely gouging, and as I have said, I also think they cannot afford to sell below cost. Your reference to that as a payday loan is quite apt.
But they cannot afford to do nothing either. I think they will make this deal, one way or the other.
Some of you seem to think that BCA and AB are in the business to produce planes at a cost that works for Ryanair business model and not for them....
Some of you think FR are in the business of subsidizing poorly run OEMs.
The more public this "drama" is celebrated by both sides in public the more likely I consider they will sign a deal soon.
Seems to be the way it goes...
Ryanair has a ton of 737 options at various prices based on prior deals. Boeing will honor those until they expire. Pro rating these option prices to the -10 size would be an OK deal for both parties IF economic conditions remain comparable.
Most likely outcome.
This last year has been anything but normal, Aluminum prices are crazy high and many alloys have become scarce. General construction costs in the US are like 30% more year to year. Composite materials are the same way. Will this continue? Seeing 1 year of this requires projecting out 2 to 3 years, quite tricky. It is surely back to strong material cost index adjustments in the contracts.
Yep. And BCA will just have to absorb those costs if they become an issue. Which probably explains why they have a hesitancy to make a deal they otherwise need. The wrong move could hurt them very badly.
Name any airline who pays more for aircraft than they have to, and especially when an order is not for just 10 or 20?
I find it very interesting that this site routinely congratulates DL for doing literally the exact same thing
as being a tightly run ship. But when it is FR, EK, QR, etc, all of a sudden it is 'dramatic.' FR have no obligation to ensure BCA's profit margins, and I do not get where on earth the idea came from that otherwise could ever somehow be true.