Ryanair agreed to pay a “premium” for the next generation of aircraft that it plans to buy from US giant Boeing between 2019 and 2024, according to its chief executive.
Last year the Irish airline became the launch customer for the 737 Max that Boeing plans to begin producing towards the end of the decade when it ordered up to 200 of the craft.
According to its chief executive, Michael O’Leary, Ryanair “paid a premium” what it believes will be a game changing aircraft as it will cut fuel bills by 20 per cent and carry 197 passengers, compared to 189 for the current 737.
“I suspect the regulatory authorities will fall over themselves to encourage an IAG takeover,” Mr O’Leary said on Wednesday about the bid for Aer Lingus. O’Leary says regulators favour IAG bid for Aer Lingus.
The airline will take delivery of 380 new aircraft from US manufacturer Boeing over the next nine years, by which time it says it will be the world’s biggest airline Ryanair hopes to fly 100m passengers next year.
Aer Lingus has 24 valuable slots – take-off and landing rights – at London’s Heathrow Airport, worth a possible €400 millionIAG still circling over Dublin trying to land Aer Lingus
Mr O’Leary pointed out that fuel accounts for 42 per cent of the airline’s costs, so a saving of 20 per cent on that will deliver huge competitive advantages.
Once the last of the 200 craft are delivered in 2024, Ryanair will have a fleet of 150. At that point it plans to carry 160 million passengers a-year, 56 per cent more than the 90 million people it will have flown over the 12 months ended March 31st.
The order is worth $17 billion at “list” prices. However, both Mr O’Leary and Boeing’s senior vice president for global sales and marketing, John C Wojick, indicated that commercial airlines such as Ryanair always pay a discount to such prices for their craft.
Owning and buying ’planes accounts for around 15 per cent of an airline’s costs. Fuel and labour take up 40 per cent each. “We are the lowest part of that equation,” Mr Wojick said, adding that commercial carriers wanted craft that allowed them to cut their running costs.
Along with Ryanair, Irish aircraft leasing specialists, SMBC Aviation Capital and Avolon have both placed substantial orders for the Boeing 737 Max.
Mr Wojick was in Dublin attend the Global Airfinance Conference, an annual gathering of aviation financiers and airlines.