Ryanair's Boeing Woes

Mounting problems at plane manufacturer Boeing could see Ryanair forced to cut its schedules and increase prices by another 10%, the budget airline’s CEO Michael O’Leary has reportedly warned.

Impact of Boeing delays on Ryanair's schedules

The low-cost carrier’s schedules were drawn up on the basis it would receive 50 of the 57 Max 737-8200s it has ordered, but major issues at manufacturer Boeing could now see the company receive just 30 planes by the end of June, O’Leary said.

Price hikes and schedule cuts

Those delays would see Ryanair forced to cut schedules, which would create a “higher fare environment in Europe” that could see Ryanair’s ticket price rise by up to 10%, he warned.

Continuous price adjustments

Ryanair’s prospective 5%-10% price hikes would sit on top of 17% increases that the budget airline has already made throughout 2023, as it looks to offset higher jet fuel and staffing costs.

Financial impact

The airline’s London-listed shares stayed flat on Monday having increased by 5.6% in 2024 so far, while Boeing shares slipped in early premarket action, having dropped 21% in the year-to-date.

Seeking compensation from Boeing

The low-cost carrier is now seeking compensation from Boeing for the delayed shipments, which O’Leary described as “inexcusable,” as he said the manufacturer’s problems are now constraining Ryanair’s growth.

Future implications for routes

He said getting 50 Boeing planes was crucial to the summer 2024 schedule, and if only 40 to 45 arrive by end March, routes with “high daily frequencies” would be particularly affected.

Forecast for summer fares

“Even our growth is going to be constrained and that leads to a higher fare environment in Europe this summer overall. Our average fares in summer 2023 rose 17%. We don’t think we’ll see that much – we’re budgeting for 5-10% fare rise.”

Boeing's Delivery Issues

In a recent statement, O’Leary revealed that initial expectations for aircraft deliveries from Boeing fell short due to unforeseen complications. While anticipating 30 to 40 planes, the company was only able to secure around 40 to 50 aircraft, leaving them with a less optimistic outlook on deliveries in the ballpark of 45 to 50 planes.

Series of Setbacks for Boeing

The problems for Boeing started when an Alaska Airlines 737 Max 9 plane had to make an emergency landing in January after a panel detached during flight. This incident prompted the U.S. FAA to ground the single-aisle plane until safety checks were completed.

Furthermore, in February, it was uncovered that there were mis-drilled holes on the fuselages of 737 Max planes, which are provided to Boeing by U.S. manufacturer Spirit AeroSystems. This discovery resulted in additional delays in the manufacturing process.

Potential Impact on Airfares

O’Leary also raised concerns about the Pratt & Whitney engines used on Airbus A320 planes, warning that issues with these engines could lead to further disruptions and potentially drive airfares higher during the upcoming summer months. This could particularly affect airlines such as Wizz Air and Lufthansa if their fleets are grounded.

Boeing's Response

A Boeing spokesperson expressed regret over the challenges faced by Ryanair, emphasizing their commitment to addressing customer concerns and enhancing the quality and delivery performance of the 737 planes. They assured customers that delivery schedules may be adjusted to ensure that every aircraft meets the necessary standards.

Despite these setbacks, Airbus declined to provide a comment on the current situation.