Boeing's delays could see Ryanair hike prices by 10%, says CEO O'Leary: report

By Louis Goss

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.

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 (BA) could now see the company receive just 30 planes by the end of June, O'Leary said in a press conference on Friday, according to the Guardian and other outlets.

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.

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.

The airline's (UK:0RYA) London-listed shares stayed flat on Monday having increased by 5.6% in 2024 so far. Boeing shares slipped in early premarket action, having dropped 21% in the year-to-date.

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, according to the Financial Times.

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, according to the Guardian.

"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."

O'Leary said they expected to get 30 to 40 aircraft, were "reasonably confident" they'd get 40 to 50, but far less optimistic over deliveries of 45 to 50, according to Reuters.

Boeing's problems started after an Alaska Airlines 737 Max 9 plane was forced to make an emergency landing after a panel blew off the aircraft mid-flight in January. That subsequently saw the U.S. FAA ground the single-aisle plane until safety checks were completed.

In February, a series of mis-drilled holes were later discovered on the fuselages used to manufacture 737 Max planes that are supplied to Boeing by U.S. manufacturer Spirit AeroSystems . Boeing said the discovery would lead to additional "near-term" delays.

O'Leary, who has worked as Ryanair's CEO since 1994, said problems with the Pratt & Whitney engines used on Airbus A320 planes could see airfares rise even higher this summer if planes operated by carriers including Wizz Air (HU:WIZZ) and Lufthansa (XE:LHA) are grounded.

"We are communicating with customers that some delivery schedules may change as we take the necessary time to make sure that every airplane we deliver is high quality and meets all customer and regulatory requirements," a Boeing spokesperson told MarketWatch.

"We deeply regret the impact this is having on our valued customer Ryanair. We're working to address their concerns and taking action on a comprehensive plan to strengthen 737 quality and delivery performance," the Boeing spokesperson added.

Airbus was approached by MarketWatch for comment.

-Louis Goss

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02-26-24 0517ET

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