European budget airline Ryanair threatened to cancel hundreds of Boeing aircraft amid the US-imposed tariffs.
News Agency Reuters first reported the story on Thursday.
The airline has ordered the largest aircraft of the 330 Boeing 737 at a list price of over $3 billion.
In a letter to a privately held US lawmaker, Ryanair CEO Michael O’Leary said: “If the US government is moving forward with an unfair plan to impose tariffs, then if these tariffs effectively affect the price of exports to Europe on Boeing aircraft, we could post both current Boeing orders again.
The threat from one of Europe’s biggest low-cost airlines and Boeing’s biggest customers was the latest indication of a potential sorting of the global aerospace industry if Trump doesn’t exempt the sector from his tariff plans.
The letter seen by Reuters is a response to the warning from Illinois Democrat Raja Krishnamouan, who says that the previous proposal may consider Komak’s orders when it comes to the impact of Ryanair’s security.
But with Comac not yet certified in Europe, Ryanair may find it difficult to follow the threat, as Boeing’s main rival Airbus says it sold out in the remaining decade, a source told Reuters.
Escalating tension
O’Leary’s letter is an escalation from an earlier threat in April, and he said the airline will delay delivery.
In March, he said Boeing executives had personally expressed confidence that the aircraft would be exempt from Trump’s tariffs.
According to Reuters, aircraft industry sources say the Boeing and Airbus contract does not include tariff provisions. The duties are expiring only after the aircraft ownership is handed over to the airline purchased and the contract is completed.
Most aircraft purchase agreements include clauses that require all sides to pay their own taxes without expressly mentioning customs duties, sources say. However, many aerospace companies are said to be considering the wording of contracts for future transactions, assuming that trade turbulence will remain for some time.
O’Leary’s comments on the letter could be a tactical intervention before a potentially tough period of negotiations with Boeing behind the scenes, industry sources told the outlet.
Comac rises
O’Leary said in a letter that Irish airlines have not discussed aircraft purchases with Comac since around 2011, but would consider it “of course” if it was 10-20% cheaper than Boeing’s major rival Airbus.
Airbus has repeatedly stated that it is the only competitor of the large single-isle aircraft currently certified in Europe, and has sold out repeatedly over the remaining 10 years.
Western airlines do not buy coma planes. Chinese companies have applied for certification of C919 jets in Europe, but not in the US.
The C919 Jet seats approximately 150 or up to 190 with a dense layout. This makes up most of the planes that Ryanair has in order, smaller than the Boeing Plane and Max 10 that it currently flies.
The threat from Ryanair is as Boeing is considering reselling dozens of planes trapped from China by tariffs after Boeing repatriates its third jet to the US in a delivery conflict that has spurred more criticism of Beijing from Trump.
Analysts say airlines rarely cancel delivery rather than delaying delivery, rather than delaying delivery.
According to industry sources and previous court filings, attempts by airlines to cancel contracts are usually resisted by plan makers.