Tuesday, November 03, 2009
RYANAIR is considering cancelling its fleet expansion plans, over unresolved cost negotiations with aircraft manufacturer Boeing and could opt, instead, to pass on the unused money to shareholders.
The airline has a fleet of 202 aircraft and orders lodged that will up that to 310 by 2012. Initially, 15 planes were due for delivery in the next year. But those could be scrapped with no penalty for Ryanair if a competitive price isn’t agreed.
"We would prefer to grow, but if Boeing doesn’t share our vision, then I believe Ryanair should change course before the end of this fiscal year and manage the airline over the next three years to maximise cash for distribution to shareholders.
"If we cannot invest our surplus cash efficiently in new aircraft, then we should distribute it to shareholders," Michael O’Leary said.
He added the airline has signalled to Boeing if cost discussions aren’t completed before the end of this year, then 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 programme," Mr O’Leary added. The airline has not ruled out doing a fleet expansion deal with Boeing’s main rival Airbus.
Any cancellation of new aircraft orders, however, will not affect Ryanair’s existing five-year growth targets. It has repeatedly said that the five years from 2007 to 2012 will see it doubling traffic numbers and profits.
© Examiner Publications (Cork) Limited, City Quarter, Lapps Quay, Cork. Registered in Ireland: 73385.