Ryanair orders 100 Boeing 737 planes for $11 bn
NEW YORK : Irish budget airline Ryanair agreed to buy 100 aircraft from Boeing for $11 billion, with an option to purchase another 100 planes from the aerospace giant, the companies announced Monday.
The order covers the 737 Boeing MAX 200, which Boeing touts as a fuel-efficient vehicle for the important single-aisle civilian market. The planes will accomodate up to 200 seats, up from the 160 in other single-aisle planes.
Ryanair said the giant order will enable it to meet its growth targets, which calls for it to expand from 82 million customers in 2014 to more than 150 million in 2024, which marks the end of the delivery stream of the planes under Monday’s order.
“It’s going to change the game for low-fare air travel,” Ryanair chief executive Michael O’Leary said at a news conference. “It’s also going to change the game in Europe.”
O’Leary said Ryanair plans to use the jets to enter new markets in Europe and challenge incumbent carriers.
“I hope it will hasten a new era of price wars in Europe over the next 10 years,” he said.
The move comes two months after Boeing said it was studying plans to offer more seating in its upcoming 737 MAX by introducing a version with 200 seats, 11 more than the current maximum.
A new order from Europe’s biggest no-frills carrier would mark a new phase in efforts by Boeing and European rival Airbus to appeal to ultra-low cost carriers.
Both manufacturers are adding seats to drive down the operating costs per seat, the key driver of aircraft economics.
“The 200-seat version is almost tailor-made for Ryanair,” said Stephen Furlong, an analyst with Davy Stockbrokers in Dublin. “In addition to the fuel efficiency, the extra seats should give them an extra 5 percent unit cost savings.”
Keeping up demand for the most popular types of airliner has become the Holy Grail for both planemakers as they embark on ambitious production plans, with higher output volumes playing an important role in cutting costs and boosting margins.
In June, Airbus said it would increase the maximum number of seats on its revamped A320neo to 189, matching the capacity limit on the main variant of the Boeing 737 MAX and providing fuel savings of 3.5 percent per seat.
Weeks later, Boeing leapfrogged its European rival by announcing plans to offer a 200-seat version of the 737-8 MAX, which Boeing Commercial Airplanes Chief Executive Ray Conner said would offer unspecified cost savings of 5 percent per seat.