Boeing has secured a landmark order from one of its most important customers, with Ryanair agreeing to purchase as many as 300 of the company’s largest 737 Max aircraft in a bet on the post-pandemic travel recovery.
The order, made up of 150 firm purchases and the same number of options, has a value of $40 billion, Boeing and Europe's biggest budget carrier said in a statement released on Tuesdsay, though customers typically secure big discounts on major deals.
Dublin-based Ryanair is projecting an 80% jump in its annual passenger traffic to 300 million travellers by 2034, compared with 2023.
It has said it plans to recruit more than 10,000 new cabin-crew staff, engineers and pilots to help meet the goal.
The huge purchase of Boeing’s largest 737 variant marks an important endorsement from one of the US manufacturer’s most loyal customers and highlights how carriers are willing to splurge on fleet upgrades again as air travel rebounds. Ryanair said the deal was the largest order ever placed by an Irish company for US manufactured goods.
“In addition to delivering significant revenue and traffic growth across Europe, we expect these new, larger, more efficient, greener, aircraft to drive further unit cost savings,” Ryanair chief executive officer Michael O’Leary said in the release.
Deliveries will start in 2027 and 2033 and aim to replace many older 737NG aircraft.
Biggest buyer
Ryanair is Boeing’s biggest buyer in Europe, having built its entire fleet of short-haul aircraft around the workhorse model.
The Covid-era shutdown of some European carriers and scaling back at others has created openings for Ryanair. O’Leary has cited growth in Italy, where Alitalia was succeeded by the smaller ITA, in Portugal, where state-ward TAP is now up for sale, and markets in Ireland and Spain, where incumbents were slow to restore capacity, as providing Ryanair with ample opportunity for growth.
The budget airline is among companies that have predicted a summer booking surge, particularly on shorter-haul routes to sunny destinations like Spain or Italy. British Airways parent IAG raised its forecast for the year last week.
Ryanair joins other airlines expanding their fleets, having repaired their balance sheets and repaid government loans. Deutsche Lufthansa said in March that it would buy 22 new widebody aircraft from Airbus and Boeing in an order valued at $7.5 billion at list price.
A month earlier, Air India announced a 470-plane order with the two manufacturers in what is the largest purchase in commercial aviation history to date.
Some delays
The 737 Max 10 has not been without hiccups. Boeing now expects the US Federal Aviation Administration to begin long-delayed certification flights for the aircraft this year, with the first deliveries expected in 2024. In December, US lawmakers struck a deal to exempt still uncertified Max 7 and 10 models from a a new cockpit requirement that would have taken effect at the start of 2023 and potentially caused more delays.
Airlines that have committed to the 737 Max 10 include Delta, United and IAG. The aircraft, which is still awaiting certification, competes with the Airbus A321neo, the European company’s biggest seller, as carriers move increasingly to the biggest versions of the most widely flown narrow-body jets.
Ryanair previously topped up its order for the 737 Max 8 version with a special high-density configuration to a total of 210 aircraft. It has already received about 100 units of the model. The airline has continuously bought larger aircraft to expand capacity, going from the 737-800 with 189 seats to the Max 200 with 197 to the Max 10, which will have room for 230.
O’Leary is expanding the fleet as he seeks to grow traffic to 225 million passengers over the next four years. With its higher capacity 737 Max 8, dubbed the 8200, O’Leary claimed in January that there is a widening cost gap between Ryanair and other European carriers. The even larger Max 10 now gives him another weapon.