Ryanair Places Order With Boeing For Up To 300 737-10s

Ryanair has signed a purchase agreement with Boeing for 150 737-10 aircraft for delivery between 2027 and 2033 and secured options for 150 more.

Fitted out with 228 seats, the larger 737-10 is set to help the Dublin-based ULCC continue its ambitious plans to increase customer numbers and market share.  

Ryanair foresees traffic growth to around 300 million passengers per year by fiscal 2034, giving it around 30% market share in Europe. In its fiscal 2024, which runs to March 2024, Ryanair is expecting to carry around 185 million passengers.  

The configuration of the 737-10s will represent an increase of 21% in seats versus the 189-seat Boeing 737 NG aircraft that half of this latest firm order is set to replace—the rest will be used for growth.   

Speaking at a signing event on May 9 with Boeing CEO Dave Calhoun and Boeing Commercial Airplanes CEO Stan Deal, Ryanair CEO Michael O’Leary said the new aircraft would help his carrier pursue its growth plans, in particular to neighboring countries such as Morocco, Israel, Jordan and Egypt. 

O’Leary also pointed to the “staggering efficiency and environmental improvements” offered by the Leap engines. 

“I think the biggest prize we’re looking at is Ukraine,” O’Leary said. “We were the largest airline in Ukraine with the Russians invaded last year. We intend to be the first airline back in there when ... the Ukrainians successfully repel the Russian invasion. And we will go back in there within two weeks of it being declared safe by the European authorities.” 

At that point, the airline would start with services to three or four of Ukraine’s main airports, O’Leary said. “We think within 12 months we would be basing aircraft in Ukraine,” O’Leary said, noting that Ryanair has been hiring Ukrainian pilots—more than 100 in the past 12 months—and cabin crew based in Romania, Bulgaria and Poland. “We’re investing heavily in what we think will be a big growth market in Ukraine, when we see the war end, which we hope will be sooner rather than later,” O’Leary said. 

In the short-term, Ryanair, whose current fleet stands at 514 aircraft, is expecting about another 20 737 MAX family aircraft from previous large orders to arrive in its fleet in the next two months. “Stan [Deal] has promised to deliver me about another 20 aircraft in the next two months,” O’Leary said. “Stan has said they will all get there on time.”  

Asked about delivery delays on current MAX orders and the production issues that emerged in March—in which non-conforming vertical fin attachment fittings supplied by Spirit AeroSystems must be repaired by Boeing on scores of undelivered 737 MAXs—O’Leary said, “We had the commitment with Boeing that we would take delivery of 51 aircraft by the end of April this year. We’re now pretty confident we’ll get probably 48 or 50 of those aircraft by the end of July. We might even get all 51.” 

While there had been challenges, those were almost inevitable within large aircraft orders, O’Leary said.  

“Generally speaking, albeit with a two- or three-month delay, we will get all of the aircraft that Boeing had committed to deliver to us for the peak summer period. We will have to take some seats out of our schedules in May and in June and the first half of July, but it’s reasonably small, we won’t cancel any routes ... We’ve already publicly said that it will not have any material effect either on our schedules or our customers are our results through the very busy summer 2023 period.” 

Certification Questions

Looking ahead to Ryanair’s 737-10 deliveries, planned from 2027, Calhoun said the -10 was still on track for certification in 2024. “The cert is ’24,” Calhoun reiterated. “We won’t give you a date because that’s not our job, it will be the FAA’s. But the airplane is performing beautifully and we’re progressing so we’re going to maintain that schedule.” 

O’Leary also said he was confident that the aircraft would be certified on time. “We’ve already had discussions with EASA. I know that the FAA are working closely with Boeing and that relationship from a regulatory perspective has dramatically improved over the last 12 or 18 months so we have no fear of the MAX 10s getting regulatory certification. Whether that’s in the late ‘24 or early ‘25, it will be well ahead of our first deliveries in 2027. And we look forward to working with Boeing, the FAA, and the European regulator EASA to try to help Boeing to get the aircraft certified as soon as possible in Europe.” 

The 737-10 deal was done quickly, with the two parties only starting negotiations about two months ago. “We’re very pleased to have reached this agreement,” O’Leary said. “We had a bit of a bust up about a year ago over pricing. And we’ve had to move somewhat to get this deal done today. But I think it’s a bit like a marriage, we have occasional rows and occasional splits and we come together and kiss and make up.”  

O’Leary noted that the airline had never before failed to convert options and said, “We confidently expect that we will convert those options in due course.” 

Asked why Ryanair had opted to take aircraft for delivery well after the expected certification date, O’Leary said, “It’s a combination of Boeing is tight on delivery positions. That’s why we’ve committed to deliveries that run for 2027 all the way out to 2033. But it’s also by taking a gap for a year or two. It helps us I think to take a brief pause in what has been a tumultuous decade of growth and before we start off with another decade of growth across Europe.” 

Bernstein analyst Alex Irving, in a research note, wrote, “In our view this is the turning point for [Ryanair] as it slows growth from the high single-digit rates seen over the last cycle, and into a more mature phase focused on cash returns.”  

Boeing announced earlier in 2023 that it would be opening up a fourth MAX production line in 2024. Asked during the press conference if a fifth would ever be necessary, Calhoun said: “We have projected for the next several years what we would refer to as a supply-constrained rate. So we think we can get to 50 largely because of supply constraints, not because of demand shortfalls. Demand actually would support rates significantly higher. So for now, we’re just going to keep planning ahead so that we can get 50 out and meet customer commitments on time. And we will be evaluating every step of the way whether we need more capacity or not. If the supply constraints that we experience today and the projections have relaxed somewhat, that day could come, and nothing would make us happier. But for right now we’re going to do four ... We’re going to started on that fourth line very early, which is what we announced, so that we’re ready when the time comes next year.” 

At list prices, including the options, the overall deal for the new 737-10s is worth over $40 billion, Ryanair said, making it the largest order ever placed by an Irish company for U.S. manufactured goods. O’Leary said the group had negotiated a discount with the manufacturer, which had been keen for the airline to commit to a large number of new aircraft.