ARLINGTON, Va., May 9, 2023 – Boeing [NYSE: BA] and Ryanair announced Europe’s leading low-cost airline has selected the largest 737 MAX model to power its future growth with an order for up to 300 airplanes. The purchase agreement is the biggest in Ryanair’s history and includes a firm order for 150 737-10 jets and options for 150 more. Image credit: Boeing
Months earlier than anticipated by Michael O’Leary himself, Ryanair has agreed with Boeing on an order for 150 MAX 10s plus 150 options. In March, the Group CEO of the Irish low-cost airline said that he anticipated discussions to take six months or up to a year, but he noticed there had been a willingness on both sides to get the deal done, he said during a press conference on Tuesday. Ryanair and Boeing finally get a MAX 10 deal done.
Remember where this deal is coming from. In September 2021, Ryanair unilaterally ended discussions with Boeing as the airframer was to move even an inch to offer the carrier a discount. O’Leary kept saying for months last year that there was nothing to report but added that he wasn’t in a hurry either as Ryanair had sufficient MAX 8200s in its unfilled orders list.
Come January 2023, things changed and both parties approached each other again, resuming discussions in early March. Today O’Leary said that he was surprised about how negotiations with Boeing had gone since then. “We wanted to get an order done. We have to recognize what is happening in the industry: both Boeing and Airbus see a dramatic rebound in orders. I think Airbus’ order book is longer than Boeing’s, but Boeing’s order book is filling up rapidly. On our side, if we didn’t move quickly, we might have been looking at later deliveries in 2028 and 2029 instead of 2027. From Boeing’s point, it was in their interest to have a large order from their largest customer in Europe. Good things happen when people can move quickly.”
Getting a discount
O’Leary told AirInsight in late March in Brussels that talks focused on more MAX 8200s, but that Boeing was pressing on the MAX 10. The CEO said then that he would want a significant discount for the MAX 10s if he would buy them because at 228 seats the yields per seat would be less favorable than those of the -8200s.
In today’s press conference, O’Leary said that “there is a big challenge for us in stepping up (from the 189-seat 737NGs and 197-seat MAX 8200s), in particular when you are delivering six to eight sectors per day (per aircraft) in a 228-seat aircraft. We said we would step up to the MAX 10 if we would get a modest discount on the additional seats. I am pleased to say we got a very modest discount.”
He added that with the MAX 10, “we will have to sell seats at lower prices in the next decade. We have to recognize that we have to operate across Europe in a marketplace where many of our so-called competitors are operating the 230-seat A321neo. I believe the MAX is the better aircraft. We will continue to beat all of our competitors in Europe. But it would be very difficult to compete for us going forward in the next decade if we were trying to compete with a 230-seat Airbus aircraft with a 197-seat Boeing, even how great that aircraft is.”
A question will be if Ryanair will be able to do 25-minute turnarounds with a 228-seat aircraft. “We will have special training programs for our customers for the next ten years on how to move faster.”
For replacement and growth
About half of the 150 aircraft on firm order will replace existing Boeing 737-800s, but the 150 MAX 10s on option will be for future growth. Ryanair and its subsidiaries Malta Air, Buzz, and (Airbus operator) Lauda want to carry 225 million passengers in 2026. The new aircraft should get them to just over 300 million by 2034, a year after delivery of the 300th MAX 10.
The group has no interest in opening new, transatlantic markets with the MAX 10, but has planned an expansion outside Europe like Morocco, Israel, Egypt, or Jordan. And it is waiting for the day that it can re-enter Ukraine, where it was the biggest airline before the war started in February 2022.
First deliveries in 2027
Ryanair expects the first deliveries of the MAX 10s in 2027, so it should not be affected by any delays in the certification process if they will happen this year. “I know that the FAA is working closely with Boeing and that relationship has improved dramatically over the last twelve to eighteen months. We have no fear about the MAX 10s getting certified, whether that’s in later 2024 or early 2025. It will be well ahead of our first deliveries in 2027. We will work with the European regulator EASA to have the aircraft certified in Europe as soon as possible.”
Boeing will build the MAX 10 on the new, fourth assembly line in Renton in 2024. Boeing Commercial Airplanes President and CEO Stan Deal said that the airframer is currently targeting 50 aircraft a month in 2025, but that is supply-constrained. A fifth line will only be opened if the constraints are no longer an issue.
