Faced with sustained yield pressure and pressure on its still positive bottom line, Ryanair is threatening Boeing that it will curtail growth, slow or cancel aircraft deliveries and abandon a plan to acquire 200 more 737-800s unless the aircraft maker drops its price.

Ryanair CEO Michael O'Leary used the announcement of first-half results to issue the warning to Boeing. If, by yearend, the aircraft maker isn't meeting O'Leary's terms, "Ryanair will end its relationship with Boeing and confirm a series of order deferrals and cancellations. We see no point in continuing to grow rapidly in a declining yield environment where our main aircraft partner is unwilling to play its part in our cost-reduction program by passing on some of the enormous savings which Boeing has enjoyed both from suppliers and more efficient manufacturing in recent years," O'Leary said.

Ryanair has said for some time it wants to place an order for another 200 narrowbodies, with deliveries to unfold between 2013 and 2016. O'Leary says he'd prefer growth, but would distribute cash in the form of dividends if the aircraft price isn't right. Airbus, Boeing's usual rival for big orders, has already indicated it isn't interested in talking to Ryanair, since it doesn't think the big 737 operator is serious about switching to another aircraft type.

In its earnings release, Ryanair reported first-half profit growth of 80% to ¬387 million on 15% more traffic, but a 17% decline in average fares. Revenue was also down 2%.

The results were bolstered largely by a 42% drop in fuel costs - unit costs excluding fuel were also down 5%. To help protect itself against fuel price fluctuations, Ryanair has started hedging into the fiscal 2011 year, with prices locked in for 50% of the first-half-year's demand.

Yield declines in the winter are expected to be 20%. The low-fare airline has warned about that development for some time and therefore is holding to its full-year guidance of a net profit of 200-300 million pounds at yearend.

Photo credit: Boeing