737 MAX Woes Hobble Budget Carrier Ryanair--Update
July 16 2019 - 5:36AM
Dow Jones News
By Oliver Griffin
Ryanair Holdings PLC said delays in deliveries of Boeing Co.'s
737 MAX passenger jet will lower growth next summer, forcing
Europe's largest budget airline to close some of its bases and make
cuts at others this winter.
The carrier said Tuesday it now expects passenger growth of 3%
in the summer of 2020, down from an earlier forecast of 7%. Ryanair
blamed the lower guidance on expected delays in receiving a fleet
of 737 MAXs. The news represents the latest ripple effect across
the aviation industry of the grounding of the Boeing jet and the
continued uncertainty on when the plane will be able to fly
again.
The 737 MAX is the latest version of Boeing's best-selling,
single-aisle passenger jet. It competes with a version of Airbus
SE's narrow-body A320. The two planes have grown into the aviation
industry's workhorses, prized by airlines for their fuel-efficient
engines, expanded range and smaller size -- allowing flexibility to
serve smaller markets.
The jet was grounded earlier this year following two fatal
crashes, one in Ethiopia earlier this year and one off the coast of
Indonesia last year respectively. Boeing is working on a software
fix to its flight control system and will need regulatory approval
around the world once it has done that.
Ryanair said it remains committed to the 737 MAX jets and now
expects it will return to flying service before the end of 2019,
though it added that an exact date remains uncertain. The airline
is a large buyer of the MAX 200, a variant of the new jet, having
ordered 58 of the aircraft, but is now planning its 2020 summer
schedules based on taking up to 30 by the end of May 2020.
The airline, which had been due to receive its first MAX planes
this spring, had already warned in May that profit would be dented
this year because of the grounding.
Ryanair said the grounding would reduce its overall fleet size
next year. It expects to add 30 jets to its network by next summer,
instead of the planned 58. This also means that passenger numbers
in the year to March 2021 are now expected to be around 157
million, down from 162 million it previously forecast.
The company said it is starting talks with its airports to
determine which of Ryanair's underperforming or loss-making
destinations could be cut or closed. The airline said it would
start such pruning in November.
Other airlines have also warned about the impact of the MAX
grounding. On Monday American Airlines Group Inc. said issues
related to jet are expected to continue to cause significant
disruption to customers and financial costs, while Norwegian Air
Shuttle ASA last week said it would book an accounting charge and
that growth would be weaker because of the grounding.
(END) Dow Jones Newswires
July 16, 2019 05:21 ET (09:21 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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