Bloomberg News

Ryanair Nears $20 Billion Boeing Max Deal as Capacity Edge Tells

June 19, 2013

Ryanair Holdings Plc Chief Executive Officer Michael O'Leary

Ryanair Holdings Plc Chief Executive Officer Michael O'Leary said, “Being able to offer 189 seats rather than 180 is pretty compelling.” Photographer: Scott Eells/Bloomberg

Ryanair Holdings Plc (RYA) said a team that it set up to evaluate Boeing Co.’s 737 Max model will report back by the end of September, paving the way for an order that might run to more than 200 of the narrow-body planes.

Ryanair is looking to seal terms including price by the end of this year as it seeks to swell the fleet to more than 500 aircraft, Chief Executive Officer Michael O’Leary said today after concluding a deal for 175 current-model 737-800s.

While Airbus SAS’s A320neo is still in the running as Ryanair seeks to add re-engined single-aisle aircraft, the Boeing model has an advantage because it offers nine more seats, O’Leary said at the Paris Air Show. The European company’s backlog also means it would struggle to provide aircraft quick enough to meet the carrier’s needs, he said.

“Being able to offer 189 seats rather than 180 is pretty compelling,” O’Leary said, adding that the capacity difference is equivalent to $1 million a year. “EasyJet, Wizz and the rest can’t compete with Ryanair and one of the reasons is that we’ve got bigger aircraft.”

A deal for 200 737-800 Max planes would be worth $20 billion at the list price of $100.5 million per aircraft. The order confirmed today -- first announced in March -- has a sticker value of $15.6 billion. O’Leary said that the discount he achieved wasn’t as big as for the last contract in 2005.

Comac Talks

O’Leary said that Ryanair will continue to push Boeing (BA:US) to develop a narrow-body with 199 or so seats, which he says would be a sweetspot for discount carriers dictated by the fact that regulations require one flight attendant per 50 passengers.

Redesigned interior architecture that might include fewer toilets in planes to be deployed on the shortest routes could help facilitate the change, he said.

Ryanair is continuing to work with Commercial Aircraft Corp. of China on single-aisle aircraft, meeting with the company twice a year, with the next consultation due in September, the CEO said.

While the current C919 model is too small for the Dublin-based company’s requirements, O’Leary said he’s pushing for a subsequent plane to meet his capacity requirements in the absence of a right-sized model from Boeing or Airbus.

To contact the editor responsible for this story: Christopher Jasper at cjasper@bloomberg.net


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