Ryanair laid out its future growth plans Tuesday with a mega deal for up to 300 Boeing 737-10s. The planes will allow the giant discounter to continue to grow seats in its core markets, as well as expand into new ones — particularly those to the east.
Michael O’Leary, Ryanair Group CEO, speaking on a rainy morning at Boeing’s headquarters near Washington’s Reagan National airport in Arlington, Va., ticked off Egypt, Israel, Jordan, and Morocco as countries adjacent to Europe where the group is or plans to grow. But none of the markets figure as highly in the discounter’s plans as Eastern Europe.
“The biggest prize we’re looking at is Ukraine,” O’Leary said. Ryanair aims to be the first airline back in the country once the war with Russia ends and Ukraine’s airspace is declared safe again by European authorities. And the airline hopes to base aircraft in Ukraine within 12 months of resuming flights, he added.
Ryanair is already hiring Ukrainian pilots and cabin crew to support its future operations in the country. The crew members are currently based in Bulgaria, Poland, and Romania.
The shift east for Dublin-based Ryanair is expected. Western European markets that are the airline’s bread and butter are “essentially fully penetrated,” Bernstein analyst Alex Irving wrote in a report earlier in May. That limits growth opportunities there for Ryanair, he added.
Historically, airline capacity in mature markets grows at roughly the rate of annual economic growth. And in the case of Western Europe, economic growth rates are likely to hover in the low single digits.
“There is structural growth on offer in Europe, in the east of the continent,” Irving wrote. He added that Ryanair could base roughly 100 new aircraft in Eastern Europe by the end of the decade. The airline is also likely to capacity to Northern Africa and the Middle East over the same period, Irving noted.
The timing of Irving’s forecast dovetails nicely with Ryanair’s new Maxes. The 737-10s will begin arriving in 2027 and continue through 2033 — just in time to support a push into Eastern Europe if Irving’s estimates hold up. Deliveries from the airline’s current order book, which stood at 126 737-8200s at the end of December, continue through its 2025 fiscal year that ends in March 2026.
Ryanair will use roughly half of the 737-10s it ordered, or 150 aircraft, to replace older 737 Next Generation models in its fleet, O’Leary said. That still allows for significant growth as the new planes will come equipped with 228 seats, or a fifth more than the 189 seats on its 737-800s. The balance of the order will be used for network expansion. The order is split between 150 firm and 150 options, though O’Leary said Ryanair intends to exercise the options in the future.
Ryanair aims to carry 300 million passengers annually by 2034. That represents a roughly 5 percent compound annual growth rate from the 169 million it flew during the fiscal year ending in March.
One place Ryanair will not be sending its new Maxes: North America.
“We have no interest in transatlantic … Longhaul, low-cost fundamentally doesn’t work,” O’Leary said. He cited the losses incurred by Norwegian Air before it closed its longhaul, low-cost business in 2021.
Boeing Boost
One cannot understate the significance of Ryanair’s order for Boeing. O’Leary has been an outspoken critic of the airframer on everything from delivery delays to the price of the 737-10. As recently as November, he described the airline’s relationship with Boeing as “challenged” due to the delays. All of that appears water under the bridge now.
“It’s a bit like a marriage,” O’Leary said. “We have occasional rows and occasional splits, and we come together and kiss and make up.”
Ryanair expects 49-50 of the 51 737-8200s that were due ahead of its summer schedule to arrive by July, O’Leary said. That will force it to pull some seats from its schedule in May and June but, he emphasized, the airline sees no “material impact” and will not cancel flights or routes.
But Boeing’s challenges are bigger than aircraft delivery delays. A “gnarly” defect, as Boeing CEO Dave Calhoun put it Tuesday, found in 737 Max parts supplied by Spirit Aerosystems will take several months to fix. And it still has not certified the 737-7 or -10, two planes it was originally scheduled to begin delivering years ago.
“The airplane is performing beautifully, and we’re progressing,” Calhoun said on the certification process. U.S. Federal Aviation Administration certification of the 737-7, for which Southwest Airlines has hundreds on order, is expected this year and for the -10 in 2024, he added.
Ryanair is in good company waiting for the 737-10. Alaska Airlines, Delta Air Lines, United Airlines, and WestJet all have orders for hundreds of planes.
“I have nothing but confidence [in Boeing], particularly since you know we’re not the [first] delivery customer,” O’Leary said. Ryanair’s new Max order is worth $40 billion at list prices.
