Irish low-cost carrier Ryanair has struck a landmark multibillion-dollar deal to buy up to 300 Boeing aircraft, signalling a big expansion of its fleet in the latest sign of the travel industry’s revival.
The agreement for the 737 Max-10 aircraft, including 150 options, is valued at more than $40bn at current list prices, although airlines typically secure significant discounts on large orders.
It comes after discussions collapsed more than 18 months ago over a disagreement on price. The aircraft will be delivered between 2027 and 2033.
The order is an endorsement of the largest variant of Boeing’s 737 Max and underlines the appetite of airlines to splash out on new aircraft as travel has rebounded in the wake of the Covid pandemic.
The boom in demand has led to industry-wide supply chain problems and left Boeing and rival Airbus struggling to deliver jets to big customers. Boeing warned last month that a production issue on the Max would hamper deliveries in the short term, which Ryanair said would lead to a small number of flight cancellations this summer.
Ryanair on Tuesday said the substantial new order would allow it to increase traffic by 80 per cent over the next decade, and forecast passenger numbers to increase from 168mn passengers at the end of March this year to 300mn by March 2034. Some 150 of the new aircraft will be used to replace Ryanair’s older Boeing 737NG planes.
The airline said the agreement would also create more than 10,000 new jobs for pilots, cabin crew and engineers.
Ryanair chief executive Michael O’Leary has spent much of the past 18 months criticising Boeing and its leadership over its prices, and the production problems which have led to delays and setbacks in the delivery of its aircraft in the past two years.
But on Wednesday O’Leary said the talks on the order, which restarted earlier this year, had accelerated faster than anticipated.
“We have been pleasantly surprised by the meeting of minds” between the two companies, he said, adding that the rebound in the industry was another factor driving the deal.
“If we didn’t move quickly there was a danger we would have been looking at later deliveries in 2028 or 2029.”
The deal will also allow Ryanair to offer lower fares in Europe, O’Leary said. The airline selected the largest version of the Max, which he said would have 21 per cent more seats but burn 20 per cent less fuel than the airline’s current 737NGs.
Ryanair chief financial officer Neil Sorahan said the new aircraft would cut costs by 10 per cent excluding fuel, compared with the older 737NGs which are still in service.
He said this would allow the airline to cement its cost advantage over rivals and fuel further growth, estimating that Ryanair would carry 30 per cent of all European short-haul passengers if it hits the target of 300mn passengers in the 2030s.
“It was about time we got in and did another aircraft order, and I am sure we will be back in a couple of years looking for the next one,” he said.
Ryanair ordered 75 aircraft from Boeing during the depths of the pandemic in December 2020, at prices Sorahan said would never be repeated.
He admitted that Ryanair would have “liked a bit more” in discounts for the latest order from Boeing, but said “we are happy with the deal we have done”.
Airlines across Europe are preparing for a strong summer after reporting buoyant sales in recent months and no impact from the broader economic headwinds in the region.
Ryanair has led the industry’s recovery from the coronavirus pandemic, including expanding its schedules and moving into new markets as financially weaker rivals retrenched or collapsed.
The airline forecast a profit after tax of between €1.3bn and €1.4bn for its financial year ending in March.
