Ryanair's Profits Hit by Lower Fares, Higher Costs -- Update
July 29 2019 - 1:21PM
Dow Jones News
By Doug Cameron
Ryanair Holdings PLC said further delays in the return to
service of Boeing Co.'s 737 MAX would lead to job cuts and less
flying during next year's peak summer travel season.
One of Boeing's biggest customers, Ryanair had expected to
receive the first of 135 MAX jets it has ordered this past April.
But the planes have been grounded by global regulators since March,
after two fatal crashes in six months that killed 346 people.
Ryanair has yet to receive any of the jets, and now expects it
will end its 2020 fiscal year with as many as 30 of the MAX
aircraft, rather than the 58 it has contracted to receive by
then.
"I think there is going to be significantly less capacity in
Europe in summer 2020, in part, because of the MAX delays," Ryanair
Chief Executive Michael O'Leary said Monday, warning that further
schedule slippages could leave the airline with no MAX jets next
summer.
Boeing is aiming to have software changes to the MAX approved by
regulators in the fourth quarter, but some carriers and officials
don't expect the plane to be cleared to fly again until early next
year.
Mr. O'Leary said while Ryanair is in talks with Boeing over
possible follow-on orders, it is also adding to the fleet of Airbus
SE jets flown by its Lauda unit. Airbus is "pricing very
aggressively at the moment," Mr. O'Leary said as the Ireland-based
carrier a reported forecast-beating quarterly profit on Monday and
left its fiscal 2020 guidance unchanged.
Ryanair said further delays in the return of the MAX and pricing
pressures in the U.K. and German markets could trigger job cuts and
the possible closure of some of the carrier's airport bases.
He said he also expects more European discount airlines to go
out of business this winter, noting plans by Norwegian Air Shuttle
ASA -- a significant MAX operator -- to close some of its own
airport bases this fall.
Mr. O'Leary said Ryanair remains committed to the MAX, and
didn't expect it would have to market the plane differently from
its existing 737 fleet when it starts service. Ryanair has its own
MAX pilot-training simulator and could accept as many as eight new
planes a month he said.
Boeing has set aside an initial $5.6 billion in compensation for
MAX customers, though analysts expect only a small portion to be
paid in cash, with the bulk in discounts on future plane deals and
aircraft services.
(END) Dow Jones Newswires
July 29, 2019 14:06 ET (18:06 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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