Boeing in $15.6-bn aircraft deal with Ryanair
20 March 2013
A day after rival Airbus unveiled its largest-ever order of $24 billion for 234 Airbus 320s and 321s from Indonesian budget airline Lion Air, a traditional Boeeing customer, Boeing said yesterday, low-cost European carrier Ryanair had committed to buy 175 Next-Generation 737-800 jet liners, costing around $15.6 billion at list price.
Ryanair's order is aimed at offering more competition to rival carriers, and the purchase will allow it to increase its fleet to more than 400 aircraft, serving over 100 million passengers per year across Europe by the end of the delivery stream in 2018.
Ryanair CEO, Michael O'Leary, said that the purchase will create over 3,000 new jobs for pilots, cabin crew and engineers, while allowing the airline to grow by 5 per cent per annum over the next several years.
The deal, which is Boeing's largest to date this year, and the largest ever from a European carrier, is expected to give boost the US aircraft manufacturer, which has been struggling recently with the problems of its advanced 787 Dreamliner aircraft.
Just a day before, Boeing's arch rival Airbus bagged a $24-billion order for 234 A320s and A321s from Indonesia's LionAir, the company's biggest civilian order ever. (See: Airbus bags biggest ever order for 234 aircraft worth $24 bn from budget carrier LionAir)
Boeing commercial airplanes president and CEO Ray Conner said, ''This agreement is an amazing testament to the value that the Next-Generation 737 brings to Ryanair.''
''Our partnership with this great European low-cost carrier is of the utmost importance to everyone at The Boeing Company and I could not be more proud to see it extended for years to come," he further stated.
Dublin, Ireland-based Ryanair owns the largest Boeing fleet in Europe with around 305 737 aircraft. About 75 new planes will replace the older jets, while the remaining 100 will be added to grow the airline's operations in Europe and across the Atlantic. The low-cost carrier flew 76 million passengers in 2012.
Ryanair also said that it is evaluating potential purchase of Boeing's more fuel efficient 737 Max aircraft which enters service in 2017.
The Boeing 737-800 jets can seat 189 passengers in comparison with Airbus' equivalent of A320 which seats 180 in a single-class configuration. Analysts believe that the extra capacity factor might have influenced Ryanair's decision in Boeing's favour.
Ryanair is expected to get a significant discount to the $89 million list price for the aircraft with its bulk order.
The airline plans to fund the purchase from cash flow and debt. The company said that it will hold on to further share repurchases and special dividends until 2015 due to increased capital expenditure.
Boeing's most-advanced 787 Dreamliners were grounded across the world in January following battery problems and fires on several of its planes and the matter is under investigation by the US Federal Aviation Administration (FAA) and the National Transportation Safety Board (NTSB).
Last week, the company said that a redesign of the aircraft's battery systems could allow commercial flights to resume within weeks. (See: Boeing revamps Dreamliner batteries; to get airborne 'in weeks')