Ryanair boss, Michael O'Leary, today threatened to ditch his ambitious expansion plans if he cannot agree a deal with Boeing by Christmas – and hand the money saved to shareholders instead.
Ryanair has been in discussions with the American manufacturer for months over an order of 200 planes for delivery between 2013 and 2016. Some of the planes are intended to support new routes, while others are expected to replace part of the existing fleet.
Europe's largest short-haul airline also warned it might cancel planes it has already ordered from Boeing.
Michael Cawley, the low-cost carrier's deputy chairman, said 15 of 48 planes due for delivery next year could be cancelled or postponed, which would hit passenger growth. The warning came after the company posted an 80% jump in net profits.
"We'd like to order more aircraft to continue this rate of growth from 2013 to 2016, but if we don't reach a deal with Boeing before the end of December we're going to break off these discussions and then we'll change the strategy," said O'Leary, the carrier's chief executive. "If we can't spend our cash buying cheap aircraft, we may as well give it back to shareholders ... I think they'd be delighted."
Boeing had previously described the potential order as "the deal of the year".
O'Leary blamed the main aircraft supplier for the lack of progress, saying Boeing was unwilling to pass on some of the "enormous" savings it had enjoyed from suppliers and more efficient manufacturing practices in recent years.
He added: "We would prefer to grow, but if Boeing doesn't share our vision, then I believe that Ryanair should change course before the end of this fiscal year and manage the airline over the next three years to maximise cash for distribution to shareholders." O'Leary owns 4% of Ryanair and would be one of the biggest beneficiaries if the company started paying dividends.
Traders interpreted the comments as a tactical move in the bargaining with Boeing. O'Leary has previously hinted he may switch to Airbus.
Even so, Ryanair is set to grow further and reiterated its target of carrying 90 million passengers a year, having already ordered another 100 planes from Boeing due by 2012. It carried 36.4 million passengers in the six months to September and is on track to hit 66 million by the end of 2009.
The Irish airline reported net profits up 80% to €387m (£349m) over the half year, thanks to a 42% fall in fuel costs. Average fares have dropped by 17%, which means that Ryanair is forecasting losses in the second half, although it expects to make a profit of around €200m in the full year.
O'Leary said the average fare had fallen to £30, including taxes and luggage check-in costs, declaring: "Flying has never been cheaper on Ryanair." However, Ryanair recently introduced a mandatory £5 online check-in fee (£10 for a return flight) when it abolished check-in desks to save money.
In typical combative form, he took a swipe at rival British Airways, which is on track for a second consecutive annual loss. "BA have got waterfalls in their head office. The first thing I'd do if I were in charge of BA is turn off the waterfalls. The only time we have waterfalls in the Ryanair office is when the toilet or the sink leaks."
O'Leary also said it was "highly unlikely" Ryanair would make a third bid for smaller Irish rival Aer Lingus. "Aer Lingus is run by the government and the unions, and they're busy running it into the ground," he claimed, adding: "We won't make another approach until they come to us begging to rescue it."
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