Skip to Content

How the Boeing 737 Max crisis is hurting the plane’s biggest buyer in Europe

Ryanair’s ambition to carry 200 million passengers by 2024 could be delayed by two years because of Boeing’s 737 Max crisis.

Just six months ago, Europe’s biggest low-cost airline was banking on having 30 737 Max jets by summer 2020. That was already fewer than the original plan for 58 deliveries, but would have allowed it to carry more passengers during the peak holiday travel season.

Now it expects to take delivery of the first planes only in September or October this year, Ryanair CEO Michael O’Leary said on Monday.

That will delay its goal to carry 200 million passengers by 2024 at least until 2025 or 2026, O’Leary said on an earnings call.

The 737 Max was grounded following two fatal crashes. Boeing says it doesn’t expect the plane to be approved to fly until the middle of this year, but the US Federal Aviation Administration said late last month that it could get approval before then.

There’s a lot at stake for both Boeing and Ryanair, which is already seeking compensation from the planemaker for losses it has suffered as a consequence of the grounding.

Ryanair is Boeing’s largest European customer for the 737 Max, according to a Boeing spokesperson, with orders for up to 210 of the jets. The advantage for carriers, particularly low-cost airlines such as Ryanair, is that the plane carries 4% more passengers and consumes up to 20% less fuel than today’s most efficient commercial aircraft, according to Boeing.

“We believe this is a great aircraft,” said O’Leary, adding that Ryanair pilots have received training in flight simulators and report that it “handles brilliantly.”

The airline is discussing the pricing of the 737 Max aircraft with Boeing and also possible reimbursements for losses caused by the delayed deliveries, O’Leary said.

“Those discussions continue but can’t be finalized until we have a revised delivery schedule,” he added, noting that Ryanair has postponed all pre-delivery payments to Boeing.

The delay to deliveries of 737 Max jets means Ryanair has had to close a number of loss-making winter bases in Spain, Germany and Sweden. “More closures cannot be ruled out,” Ryanair finance chief Neil Sorahan said on the earnings call.

Ryanair carries 154 million passengers. It plans to open 111 new routes this summer, O’Leary said.

Lower capacity growth had driven slightly higher fares over the three months to December 31, a trend that is expected to continue this summer, he added.

Ryanair reported net profit of €88 million ($97.4 million) for its fiscal third quarter, up from a loss of €66 million ($73 million) in the same quarter of the previous year.

The airline said it still expects profit for the full fiscal year of between €950 million ($1 billion) and €1.5 billion ($1.7 billion), compared with profit of €1.02 billion ($1.1 billion) the previous year.

Article Topic Follows: Biz/Tech

Jump to comments ↓

Author Profile Photo

CNN

BE PART OF THE CONVERSATION

KVIA ABC 7 is committed to providing a forum for civil and constructive conversation.

Please keep your comments respectful and relevant. You can review our Community Guidelines by clicking here

If you would like to share a story idea, please submit it here.

Skip to content