DALLAS – Europe’s biggest LCC, Ryanair (FR), warns that delivery delays of Boeing 737 MAX aircraft may force the airline to extend the operational service of its Boeing 737-800 Next-Generation fleet.
The company announced the above during the Ryanair Holdings Group H1-2022 results conference.
Michael O’Leary, CEO of FR, declared, “We’re growing faster than we originally thought we would at this time because we’re not retiring older aircraft.” In fact, one of the aircraft we returned from an operating lease two years ago has now been offered back to us at a very significant discount. And we will opportunistically add B737NGs in ones and twos where there’s a financial incentive to do so.”
It’s important to note that FR is a special customer of the Boeing 737 MAX; the airline is the only one to have ever requested and operated the 200-seat variant of the type, the Boeing 737-8200 MAX. Thanks to increasing passenger capacity on these aircraft, the LCC is able to reduce costs per passenger through economies of scale.
Signs of this potential extension of the operational service of the Next-Generation fleet were seen as the airline announced last week that all the Boeing 737-800 aircraft will undergo a massive retrofit operation to equip every airplane with the more fuel-efficient “Scimitar Winglets.”
The Dark Side of Massive Aircraft Orders
One of the most common and effective strategies in low-cost airline development is the practice of large-group aircraft orders. Airlines such as FR or W6 thrive on this method, as it lets them receive bulk discounts after placing orders for hundreds of aircraft at one time.
After 9/11, most airlines were fighting for survival due to the unprecedented aviation crisis caused by the terrorist attacks. At the time, FR placed a 100-aircraft order for the dried-up Boeing 737-800, with options for 50 more planes, in a deal worth US$9.1bn (£6.4bn).
At the time, O’Leary said the deal would “allow Ryanair and Boeing to revolutionise short-haul travel all over Europe in the same way that Southwest and Boeing have in the United States.” The order came as a huge relief for Boeing, which also fell victim to the worst crisis in the airline industry in a decade.
Two decades later, those Boeing 737-800s comprise a big chunk of the FR fleet we see in operation, the aircraft having been delivered to the airline to perfectly meet the needs of the carrier’s European expansion.
However, by placing orders of this magnitude, the disadvantage is that airlines tend to place their entire confidence in the manufacturer, becoming dependent on its efficiency and suffering from any delays that the order may suffer over time.
This is exactly what happened to FR, which, in order to try to match the fuel efficiency expected to be reached with the delivery of the MAX aircraft, was forced to perform the aforementioned retrofit operation on its current aircraft, investing more than US$200m in the process.
Featured Image: Fabrizio Spicuglia/Airways