Ryanair contemplates tapping capital markets

Ryanair is for the first time looking at tapping capital markets directly, as it prepares to take delivery of recently ordered Boeing aircraft.

Europe’s largest airline by passenger numbers has raised funds in the past through bonds backed by the US government-owned ExIm bank, but is in the process of seeking a rating to gain direct access to the debt markets.

“We are putting ourselves in a position to allow us access to capital markets. We have done it using US government export credit... [but] we haven’t raised any money on Ryanair’s book in debt markets,” corporate treasurer James Dempsey told Reuters.

Among options on the table, Ryanair is exploring whether to use a rare euro-denominated version of Enhanced Equipment Trust Certificates (EETC), a dollar-denominated funding structure popular with US airlines.

“We tend to value our aircraft owned in euros and we are in the eurozone,” Mr Dempsey said, speaking on the sidelines of an Airline Economics conference in Dublin.

“If you take a US capital markets product, we have to swap that back [from dollars]. So we prefer to raise the money in euros. That is something we would be very interested in.”

So far, only Air France has used euro-denominated EETC instruments, conference delegates said. EETCs, a critical source of funding for US carriers, are attractive because the planes — the carrier’s main long-term asset — are put into a purpose trust to protect investors in case of an airline default or insolvency. Such structures from non-US carriers are more rare.

Asked about the timing of a possible debt-market debut, Mr Dempsey noted that the first of 175 recently ordered Boeing 737s would not be delivered until late this year. Ryanair ordered the current-generation jets last year, taking advantage of attractive discounts as Boeing prepares to switch to a more efficient 737 MAX model, due out from 2017.

It has however said it is interested in ordering the MAX as it seeks to expand passenger numbers by 50% by the end of the decade.

Mr Dempsey declined to comment on those talks, but indicated that the airline did not feel under pressure to make a quick decision due to Boeing’s long waiting list. Most 737 MAX production slots are sold out until late-decade.

— Reuters