Ryanair's Profits Hit by Lower Fares, Higher Costs -- 3rd Update
July 29 2019 - 5:31PM
Dow Jones News
By Doug Cameron
Ryanair Holdings PLC said further delays in the return to
service of Boeing Co.'s 737 MAX jetliner 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 the company's 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 slippage could leave the airline without any 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," he said as the Ireland-based carrier
reported a forecast-beating quarterly profit on Monday and left its
fiscal 2020 guidance unchanged.
Ryanair said further delays in the return of the MAX, as well as
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
doesn't expect 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.
Write to Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
July 29, 2019 17:16 ET (21:16 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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