Ryanair flying high as it strengthens hand with purchase of 175 Boeing jets

Ryanair handed Boeing its largest European order ever on a deal for 175 jets worth $16bn (€12.4bn) at list prices that strengthens the Irish carrier’s domination of Europe’s low-cost market.

The order for current- generation Boeing 737-800s will increase Ryanair’s fleet to 400 planes from 300 at present, as old planes are retired, allowing the carrier to increase passenger numbers by 25% over the next five years as rivals plan capacity cuts.

The planes will create more than 3,000 jobs for pilots, cabin crew and engineers at Ryanair’s growing number of aircraft bases across Europe.

The deal, which must be confirmed and then approved by Ryanair shareholders, maintains the Irish airline as one of the few remaining all-Boeing carriers and is a welcome lift for the US company after Indonesia’s Lion Air picked European rival Airbus in a $24bn (€18.6bn) firm mega-order. Lion Air had been an exclusively Boeing customer for jets.

The industry benchmark 737-800, a 189-seat jet whose main competitor is the Airbus A320, is worth $89.1m (€69.1m) at list prices, but large orders attract steep discounts and industry appraisers value the plane closer to $40m (€31m).

“This deal embeds our cost advantage and pricing advantage over our European competitors,” Ryanair chief executive Michael O’Leary told Reuters in a telephone interview.

“Hopefully it will help refocus people’s minds on the fact that Boeing continues to deliver great aircraft and is growing strongly, rather than a minor issue on the 787,” he said.

O’Leary, who has a reputation for securing bargain aircraft orders during industry slumps, declined to say how much of a discount he obtained for the order, but he said Boeing’s struggles with the 787 had created an opportunity for both sides.

And, having placed a big order for current-generation 737s, O’Leary said Ryanair could place an order for Boeing’s forthcoming 737 MAX, an even more fuel- efficient model.

The 737 deal gives the Irish airline “breathing room” to talk to Boeing about orders for the 737 MAX, O’Leary told a New York news conference. He added Ryanair likes the 737 MAX and would place an order if terms were right.

Boeing Commercial Airplanes chief executive Ray Conner said Boeing has not had any difficulty closing major aircraft orders despite the battery problems with its 787 passenger jet.

“We compartmentalise that. We have a lot of people working on the 787 situation ... We’re working on producing 787s as we get the battery situation solved,” Conner said at the news conference yesterday.

Conner said the Ryanair deal fills up Boeing’s 737 production “pretty significantly” until production of the 737 MAX starts in the next few years, with first delivery slated for 2017.

Reuters


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