Ryanair buys US$ 40 billion in Boeing aircraft – 05/09/2023 – Market

Irish low-fare airline Ryanair has won a multibillion-dollar deal to buy up to 300 Boeing aircraft, marking a major expansion of its fleet in the latest sign of the travel industry’s renaissance.

The deal for the 737 Max-10 passenger jets, including 150 options, is valued at more than $40 billion at current list prices, although manufacturers often give significant discounts on large orders.

This comes after discussions broke down more than 18 months ago due to a disagreement over price. The aircraft will be delivered between 2027 and 2033.

The order is an endorsement of the larger variant of Boeing’s 737 Max jet and highlights airlines’ appetite to invest in new aircraft as travel recovers from the Covid pandemic.

The boom in demand has led to supply chain problems across the industry and left Boeing and rival Airbus struggling to deliver jets to big customers. Boeing warned last month that a Max production problem would hamper short-term deliveries, which Ryanair says will cause a reduced number of flight cancellations this summer.

Ryanair said on Tuesday (9) that the new substantial order will allow it to increase its traffic by 80% in the next decade and that the number of passengers is expected to increase from 168 million passengers at the end of March this year to 300 million in March 2034. Around 150 of the new planes will be used to replace the company’s older Boeing 737NGs.

Ryanair said the deal would also create more than 10,000 new jobs for pilots, cabin crew and engineers.

Ryanair chief executive Michael O’Leary has spent much of the last 18 months lambasting Boeing and its leadership over its pricing and the production problems that have led to delays and setbacks in the delivery of its aircraft over the past two years.

But on Wednesday, O’Leary said negotiations over the application, which resumed earlier this year, had gone faster than anticipated.

“We were pleasantly surprised by the meeting of minds” of the two companies, he said, adding that the sector’s recovery was another factor that boosted the deal. “If we didn’t act quickly, we would run the risk of having deliveries only in 2028 or 2029.”

The deal will also allow Ryanair to offer lower fares in Europe, O’Leary said. The airline selected the larger version of the Max, which it said would have 21% more seats but consume 20% less fuel than the airline’s current 737NGs.

Ryanair Chief Financial Officer Neil Sorahan said the new aircraft will cut costs by 10%, excluding fuel, compared to older 737NGs that are still in service.

He said this would allow the airline to consolidate its cost advantage over rivals and fuel further growth, estimating that Ryanair would carry 30% of all European short-haul passengers if it reached its target of 300 million passengers in the 2030s.

“It’s about time we ordered another aircraft, and I’m sure we’ll be back in a few years for the next one,” he said.

Ryanair ordered 75 aircraft from Boeing during the height of the pandemic in December 2020, at prices that, according to Sorahan, would never be repeated.

He conceded that Ryanair would have “liked a little more” discounts on Boeing’s latest order, but said: “We’re happy with the deal we got.”

Airlines across Europe are bracing for a strong summer after reporting buoyant sales in recent months and no impact from broader economic headwinds across the region.

Ryanair has led the industry in recovering from the coronavirus pandemic, including expanding its schedules and entering new markets, as financially weaker rivals retreated or went bankrupt.

The airline forecast an after-tax profit of between 1.3 billion euros and 1.4 billion euros ($7.5 billion) for the fiscal year that ended in March.