Ryanair expects to buy 737 MAX jets from Boeing

European discount airline Ryanair said it plans to stick with the Boeing 737 MAX jet and hopes to take delivery of new planes this year despite a collapse in demand for air travel caused by the novel coronavirus pandemic.

It was good news for Boeing after many carriers had canceled or deferred orders for the 737 MAX and following the aircraft maker's first loss in 20 years.

The 737 MAX, Boeing's best-selling jet, has been grounded worldwide since March 2019 following crashes in Indonesia and Ethiopia that killed a total of 346 passengers and crew.

"We remain a committed supporter of the Boeing MAX," said Michael O'Leary, CEO of Dublin-based Ryanair, in an earnings call.

"We're pleased to see the recent progress that Boeing (has) made with the test flights of the MAX aircraft. And we are increasingly confident that Boeing will achieve their return to service in North America sometime at the end of the third quarter. We hope that would be sufficient to allow us to take some deliveries of MAX aircraft before the end of 2020."

Ryanair has ordered custom-designed MAXs and therefore can't snap up planes built for other airlines that weren't delivered and are now in storage.

Its version of the plane has additional emergency exits to handle a larger number of passengers and will require additional certification.

O'Leary expects the company will be able to negotiate hard on price.

"We're talking to our aircraft lessors and also Boeing about lowering the cost of the new aircraft we're purchasing," he told investors on Monday's earnings call.

"We're in active negotiations with Boeing on compensation for the delay in aircraft. We are renegotiating monthly aircraft lease rates to reflect the harsh environment."

Assuming the US Federal Aviation Administration recertifies the MAX for commercial service soon, Ryanair said it hopes to begin taking delivery of new planes late this year and receive 40 more by the summer of 2021.

O'Leary said the Irish airline's traffic plunged to 500,000 passengers in this year's first fiscal quarter, down from 42 million in the same period a year ago. He added that revenue fell by 95 percent because Ryanair's fleet "was essentially grounded" from mid-March through the end of June.

The CEO said he hopes the airline will fly 70 percent of its normal schedule by September. But he warned that the airline's plans are contingent on an abatement of the current COVID-19 pandemic. A second coronavirus wave, or even a sharp spike, could scuttle the plan and lead to further disruption.

A 52-page report by the US Department of Transportation's Office of the Inspector General covered activities from the initial steps in certifying the MAX in January 2012 through the second crash.

The report includes allegations of "undue pressure" from Boeing on those certifying the MAX's safety.

Critics believe the FAA relied too heavily on Boeing engineers in certifying the MAX. But others say new technology quickly outpaces the ability of government regulators to evaluate it and therefore must rely on company engineers.

In January, Boeing reported a loss of $636 million in 2019 compared with a profit of $10.46 billion in 2018. Boeing suspended dividends in March, and the CEO agreed to forgo pay this year.