Ryanair Order Caps a Good Week for Beleaguered Boeing

Photo credit:  Boeing

European low-cost carrier Ryanair placed an order for 75 Boeing 737 MAX aircraft, a signal of faith in the jet despite its remaining grounded in Europe. The order, and its size, is the first major deal for the aircraft since it was grounded worldwide more than 20 months ago in the wake of two fatal accidents that claimed more than 300 lives.

The news follows the first public flight of the B737 MAX in the U.S. on Wednesday as well as the re-certification of the aircraft last week by regulators in Europe and Brazil.

“We are gratified that Ryanair is once again placing its confidence in the Boeing 737 family and building their future fleet with this enlarged firm order,” said Boeing CEO Dave Calhoun.

Financial terms of the deal were not disclosed, but Boeing is thought to have offered Ryanair a steep discount on the jet. Cancellations for MAX orders accelerated after the Covid pandemic hobbled the global airline industry. The grounding resulted in more than 400 cancellations for MAX orders and forced the resignation of then-Boeing CEO Dennis Muilenberg. Due both to the grounding and the collapse of the airline industry, Boeing reported a $1.4 billion third-quarter loss in its Commercial Airplanes unit, on revenues that were 56% lower than 2019.

Ryanair had 135 orders for the jet outstanding, and today’s order brings its total to 210 orders for the jet. Boeing reports a yearslong backlog for the jet, although the airframer has removed hundreds from its tally, and has continued building it after the grounding, albeit at a lower rate. The airframer has 450 aircraft that have been built but were not delivered. Deliveries to Ryanair will resume next year. It remains unclear if any of the new jets will be “white tails,” or aircraft orders cancelled by other airlines.

At the Skift Aviation Forum last month, Ryanair DAC Eddie Wilson said the carrier had no plans to add to its B737 MAX orderbook beyond the 135 firm orders and 75 options it had at the time. Today’s order suggests the 75 options were converted to firm orders.

Last week in more good news for Boeing, the European Union Aviation Safety Agency (EASA) cleared the B737 MAX to return to service in the next several weeks, after the completion of final technical fixes and a 28-day public comment period. Pilots will need to be trained on the new flight control systems. The jet could start flying early next year but remains grounded in Europe now.

Brazil’s aviation regulator ANAC also re-certified the aircraft last week, and flights by Gol, the only B737 MAX operator in the country, can resume once pilot training has been completed.

The Federal Aviation Administration (FAA) last month approved the jet to fly in the U.S. Most U.S. carriers have said they will resume flights next year, with Southwest, the largest operator of the type, saying the jet will return to service in the second quarter of 2021 as it has to re-train all its pilots. United plans revenue flights for early next year, and Alaska Airlines, which is taking delivery of its first B737 MAX aircraft in January, plans revenue flights by March.

American Airlines plans to return the B737 MAX to revenue service by the end of this year. The carrier flew several reporters on the B737 MAX on Wednesday, ensuring that favorable coverage of the aircraft would run on TV and in the media on Thursday.

Regulators worldwide grounded the B737 MAX in 2019 after flight-control software led to the crashes of a Lion Air flight in Indonesia and an Ethiopian Airlines flight shortly after take off. The length of the grounding is unprecedented in aviation history, as is the patchwork re-certification.

China has not approved the aircraft to return to service, and the delay is thought to be tied up in the larger trade dispute with the U.S.

“As soon as the COVID-19 virus recedes — and it likely will in 2021 with the rollout of multiple effective vaccines — Ryanair and our partner airports across Europe will – with these environmentally efficient aircraft – rapidly restore flights and schedules, recover lost traffic and help the nations of Europe recover their tourism industries,” Ryanair Group CEO Michael O’Leary said.

Despite the jet’s problems, most aviation industry insiders and airlines have remained bullish on the type because of its operating economics and environmental performance. At the Skift Aviation Forum last month, Air Lease Corporation Executive Chairman Steven Udvar-Hazy predicted airlines would use the pandemic to retire older, less-efficient aircraft and order newer, more efficient aircraft like the B737 MAX.