Ryanair Orders 300 737 Maxes
Ryanair laid out its future growth plans last week 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.
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 has hundreds on order, is expected this year and for the -10 in 2024, he added.
“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.
- More issues for Pratt & Whitney’s geared turbofan (GTF) engines: KLM has pulled an undisclosed number of its Embraer E195-E2 aircraft from service and resulting in “minor adjustments to its summer timetable.” Data from FlightRadar24 shows that KLM has not flown five of its 15 E195-E2s since at least early April, and three of those not since December. Go Air in India, Hawaiian, Lufthansa, and Swiss are among other airlines reporting an adverse impact to their fleets from the GTF engine supply issues.
- Philippine Airlines inked a memorandum of understanding with Airbus last week for nine A350-1000s. The planes, if finalized, would be used on the carrier’s routes to the Eastern U.S. and Canada, including New York and Toronto. Philippine Airlines operates two A350-900s.
- South African Airways plans to lease six aircraft — five Airbus narrowbodies and one widebody — to begin relaunching its international route network later this year. The state-owned airline currently flies five A320s, one A330, and one A340. South African Airways was one of the hardest hit airlines during the crisis but, thanks to its state ownership, has been unable to recover like many of its peers. It suspended flights for 18 months in 2020 and 2021 but, unlike its competitors Airlink and Safair, has severely restricted in what flights it could resume. That’s has left a a gap for others to exploit, including the aforementioned domestic players as well as foreign airlines, including Delta and United, who have piled on new flights to South Africa over the past two years.
- Air New Zealand is in talks to lease an eighth Boeing 777-300ER to support the rapid rebound in travel demand. CEO Greg Foran confirmed the discussions during a presentation last week. The news came the same week that the airline brought the last of its seven 777-300ERs back from desert storage in California. The airline has firm orders for eight 787s that will begin delivering late in 2024. Air New Zealand plans to fly roughly 91 percent of its pre-pandemic capacity during the IATA summer season through October.