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April 17, 2024

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Ryanair’s CEO Michael O’Leary is blaming the lack of available aircraft for higher fares this summer, as airlines struggle to meet peak season demand. The carrier initially forecast more than 205 million passenger from now until the end of March, 2025, nearly a 12% increase year-over-year. But Boeing production problems will force Ryanair to reduce its planned growth.

Ryanair
photo: CNBC

“With less aircraft, maybe we’ll have to bring that 205 million down towards 200 million passengers,” said O’Leary. It might be a scratch below 200 million, we just don’t know at this stage. That probably means that even our growth this year is going to be constrained in Europe, and I think that leads to a higher fare environment across Europe for summer 2024.”

“Fares in summer 2004 are going to be up again on summer 2023. Our average air fares in summer 2023 rose 17 per cent. We don’t think we’ll see that king of double-digit fare increase this year. We’re doing our budgets based on a fare increase of 5 to 10 per cent, which to me feels king of reasonable. It could be higher than that, it could be lower than that, we don’t really know. If capacity was growing, I think fares would be falling.”

O’Leary cited a potential shortfall of 12-17 new airplanes in 2024 since Boeing has the FAA “crawling all over them” since the explosive decompression of an Alaska Airlines flight in January. FAA chief Mike Whittaker said at the time “this won’t be back to business as usual for Boeing. We will not agree to any request from Boeing for an expansion in production or approve additional production lines for the 737 MAX until we are satisfied that the quality control issues uncovered during this process are resolved.”

Citing the Pratt & Whitney quality issues on the Airbus A320 family as a factor compounding industry capacity shortages at Wizz Air, Lufthansa, and Air France, O’Leary indicated stated that “if we could get all 57 aircraft deliveries from Boeing in advance before the end of June, we would make out like bandits all summer long because we have airports at the moment beating the door down to us.”

The Bottom Line:
Ryanair will certainly be looking for compensation from Boeing from aircraft delivery delays and lost profitability, as demand is outstripping supply in Europe for the upcoming summer season.  That will likely come in future discounts for additional aircraft.

When demand outstrips supply, prices rise, both for aircraft and air fares. Ryanair had planned for 174 737 MAX 8-200s ahead of the peak season, but had only 136 at year end. While their total fleet, including 737-800 models was 574 aircraft at the start of the year, the carrier is nearly 40 aircraft short of where it hoped to be.

Ryanair’s CEO Michael O’Leary is blaming the lack of available aircraft for higher fares this summer, as airlines struggle to meet peak season demand. The carrier initially forecast more than 205 million passenger from now until the end of March, 2025, nearly a 12% increase year-over-year. But Boeing production problems will force Ryanair to reduce its planned growth.