Ryanair predicted to fly through Boeing 737 Max crisis

Ryanair predicted to fly through Boeing 737 Max crisis
File photo

Ryanair will not be affected by the Boeing 737 Max fallout in the short-term but may need to reassess medium-term plans, aviation analysts have said.

The airline was due to take charge of its first 737 Max jet next month, as well as four more in May and June, while it has some 135 on order overall, with options on 75 more.

However, the Boeing plane has been grounded worldwide since the 737 Max was involved in two fatal air crashes in five months, killing 346 in total.

The Ethiopian Airlines crash this month prompted aviation authorities worldwide to ban the 737 Max, five months after a Lion Air crash off the coast of Indonesia, until they are satisfied Boeing has guaranteed the plane's safety.

Norwegian Air International has already had to rearrange flights and planes to cover for its 18 grounded 737 Max planes at a cost of up to €1.5m a day, while US airline Southwest said the grounding of its 34 jets would cut €133m from its first-quarter earnings.

Ryanair chief marketing officer Kenny Jacobs said last week that the airline's plans remained unchanged, and that it was waiting on the outcome of the investigation.

There was no comment available from Ryanair.

Goodbody analyst Mark Simpson said Ryanair would not suffer any fallout from the 737 Max grounding this year, as it had plenty in reserve.

"There is no impact this coming year as Ryanair will utilise its reserve capacity over the summer -- around 11 planes -- and possible delay lease returns.

"Even if the grounding lasted into the winter, Ryanair then has around 60 planes laid up over the low winter season so would have plenty of cover.

The issue is only a problem if the 737 Max 8 is deemed to be fundamentally flawed and issue lasts into 2020, which seems unlikely at this point in time," Mr Simpson said.

Cantor Fitzgerald managing director Robin Byde said Ryanair's growth strategy may need to be reassessed in the medium-term following Boeing's crisis.

"Our view is the main impact for Ryanair will be on its medium-term growth plans, which may now need to be reassessed.

"More immediately, costs of maintenance may rise and cost of leasing to fill any capacity gaps may increase too. Unit costs may remain higher for longer with fewer super efficient Maxes joining the fleet.

"Conversely, free cash may be stronger with lower capital expenditure. So, quite a few moving parts, of which the main one is a potential change to medium-term growth plans," Mr Byde said.

According to Boeing, it had 5,012 orders for 737 Max planes from airlines all over the world.

Some 376 of the planes have been delivered as of January this year.

The order book is said to be worth more around €600bn.

Norwegian, already feeling the squeeze following a spending splurge, has ordered 110 of the planes in total.

It said last week that while it had no plans to abandon the aircraft, it would be demanding compensation from Boeing for the grounded aircraft.

Passengers scheduled to fly from Cork and Shannon to the US east coast with Norwegian next week will now travel from Dublin Airport, the airline has said.

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