Ryanair plans to move back towards an all-Boeing fleet by cancelling leases for Airbus A320s for its Lauda subsidiary and likely replacing 30 Airbus jets at the Austrian airline with Boeing 737s, Chief Executive Michael O’Leary told Reuters.

Ryanair’s (RYA.I) purchase in 2018 of Airbus operator Lauda was pitched as a way to diversify the fleet of the budget airline group, which had until then exclusively flown Boeing jets and currently has over 450 737s.

O’Leary, whose expansion plans have been curtailed by the grounding of Boeing’s 737 MAX, said in March last year he was in early talks with Airbus about an order for 100 A321s and that Ryanair wanted to have a dual Boeing-Airbus fleet.

But on Tuesday, O’Leary said he currently viewed talking with Airbus as a waste of his time.

“We would not initiate talks with Airbus until such time as Airbus wants to initiate talks with us,” he said in an interview.

“Until they need an order from the Ryanair Group, frankly we are wasting our time talking to Airbus,” he added, without elaborating.

Instead, Ryanair planned to “significantly reduce the scale of the Lauda fleet,” said O’Leary, who is known for his brinkmanship in negotiations.

“We have (Airbus) aircraft that are due to be delivered over the next 12 months and we will cancel almost all of those deliveries,” which are from leasing companies, he said.

Assuming talks with Boeing about compensation for delays in the delivery of 210 737 MAX jets – and on a possible new aircraft order – go to plan, then Ryanair will probably replace Lauda’s 30 Airbus jets with Boeing, he added.

“As long as we can reach an acceptable outcome with Boeing, the Boeing orders we have in place would readily replace – I think Lauda will have a fleet of about 30 Airbus aircraft – we would probably replace those Airbus with Boeing over the next couple of years.”

In February, Ryanair said it was planning to increase Lauda’s fleet from 23 to 38 Airbus A320s by the summer of 2020.

Ryanair is also in talks with unions at Lauda about pay cuts and a new labour agreement.

O’Leary said the Austrian union was refusing to engage and if this did not change by the end of May, Lauda’s home base in Vienna would close, with Ryanair Boeing jets replacing the Lauda Airbus planes.

O’Leary said the talks with Boeing on compensation and a possible new order had accelerated, but would likely not be concluded by a deadline of May 18-19 and may not conclude until the MAX returns to service, which he said was likely to happen in August or September.

O’Leary said the MAX grounding could delay Ryanair’s plan to fly 200 million passengers by 2020 “by a year or two.”

Source: Reuters