Take Skift

Ryanair’s colossal machine is built on hyper-efficiency and ruthless cost scrutiny. By her own admission, Ryanair had “too many schedules, too many crews and too many costs” this summer. He won’t let this happen again.

Gordon Smith

Ryanair warned on Monday of a continued impact on passenger growth due to Boeing delivery delays. Europe’s largest airline expects to carry 210 million passengers next year, down from a previous target of 215 million. It comes as the company reported a drop in first-half net profit of 18%, slightly below analyst forecasts.

Multiple factors are at stake, but the shortage of new aircraft is one of the biggest headaches. Ryanair was due to take delivery of 11 Boeing 737 Max aircraft in the October-December quarter. Now only two are expected during that period.

Ryanair chief financial officer Neil Sorahan said: Boeing machinists strike This means delivery of the other nine aircraft will likely be delayed until the January-March quarter.

The airline originally planned 29 new planes before peak next year. Sorahan warned that other deliveries could also be delayed ahead of the important summer season. “I think some of them are going to fail. We won’t have them all before the summer of 2025. We could get 15 (new planes). “At this point it is sensible to plan our business based on slower growth next year,” the CFO said.

Even though Ryanair cut its passenger forecast, the 210 million figure would still represent a 5% increase in annual traffic. It’s rising, though not as much as growth-hungry airline executives would like.

On Monday, the company confirmed it expects to carry between 198 million and 200 million passengers in the financial year ending March 2025. For context, by the mid-2030s it wants to attract 300 million passengers a year.

O’Leary keeps pressure on Boeing

Also speaking on Monday morning was Ryanair Group Chief Executive Michael O’Leary. He described the delays as “a pain in the butt” as he continues to speak with the planemaker’s leaders.

“We continue to work closely with Kelly OrtbergStephanie Pope and team to expedite deliveries as best we can. However, the risk of delays is increasing. “I think we have to accept that we are not going to have all 29 planes before the summer of 2025,” he said.

O’Leary wants to avoid a repeat of what happened this summer, when the airline had “overscheduling, overstaffing and excessive costs” due to a mismatch in resources and operations.

Like other affected customers, the Irish low-cost airline received compensation from Boeing for the delays. However, O’Leary questioned the amount and format of the financial remedy. “We received modest compensation, but Boeing wants to restructure it so that it comes in the form of maintenance credits. It is not significant. “It certainly does not make up for the loss of five million passengers, nor the additional loss of five million passengers in (financial year) 2026.”

Earlier this year, the Federal Aviation Administration said it would not grant a production expansion for the 737 Max program. This occurred after a serious incident on board. an Alaska Airlines plane on January 5 when a door plug came loose in mid-flight. Even when the current machinists’ strike is resolved, the FAA’s decision will make it more difficult for Boeing to increase deliveries to airline customers.

All eyes on the Max 10

The Ryanair Group had 172 Boeing 737 Max aircraft in operation as of October 31. Its total fleet comprises 608 aircraft. The company is interested in taking delivery of the new aircraft as they are more economical to operate and can carry more passengers at a lower average cost than older models.

After the current set of 737 Max 8 aircraft are delivered to Ryanair, no further deliveries are planned until 2027. In particular, this concerns the 737 Max 10 aircraft which has not yet been certified by aviation regulators. It is larger than the Max 8 and will be the largest aircraft in Ryanair’s fleet.

Speaking on Monday, Sorahan seemed confident that despite supply chain issues and regulatory hurdles, Ryanair’s current schedule could be met.

“The Max 10 will not be certified until the (smaller) Max 7 is. We understand that the Max 7 is on track to be certified in the first half of 2025. If that happens, I think there is a good chance that the Max 10 will be certified in the second half of 2025. That will put us on track. receive our first Max 10 in the first half of 2027,” said Ryanair’s financial director.

The European ATC is a “disaster”

Beyond plane bottlenecks, O’Leary also took issue with another of his favorite complaints, describing air traffic control across Europe this summer as “a mess.”

“We had record delays at ATCparticularly in the first wave of departures. This is due to ATC staff shortages and staff not showing up for work. It is completely unacceptable. “There is no reason why that first wave of flights should be delayed as there is nothing in the sky.”

O’Leary called for two changes to improve the situation: more ATC personnel, particularly for early morning sorties, and the right of aircraft to fly over countries during domestic ATC strikes. “If (the European Commission) implemented those two simple measures, which are within its legal power, around 90% of ATC backlogs would be eliminated and there would be a huge environmental gain for the industry,” O’Leary said. .

Ryanair’s average fares fell 10% in the six months to September 30. The airline cited consumer cost-of-living pressures and continued high interest rates as key factors. O’Leary said the decline in airfares “appears to continue to moderate,” but the airline “remains cautious about the outlook for third-quarter average fares.”

Ending on a more optimistic note, the Ryanair boss described forward bookings and demand for the current third quarter (October to December) as “strong”.

Skift has contacted Boeing for comment.