Ryanair orders 400 new planes despite bleak outlook for airlines
Ryanair chief executive Michael O'Leary who has announced plans to buy new aircraft. Photo: Daniel Berehulak/Getty Images
Thursday August 07 2008
Ryanair, which warned last week it could be heading for its first loss since 1989, yesterday confirmed its next plane order will be for up to 400 aircraft, marking the company s largest fleet deal.
The news comes months after Ryanair began talks on the deal with the world's two largest planemakers, Airbus and Boeing.
Group chief executive Michael O'Leary said in an interview with the German newspaper Sueddeutsche Zeitung that an order could lead to the start of plane deliveries from 2013, after Ryanair s current order book expires.
"New aircraft are about half as expensive as they were a few years ago", as a result of the weaker US dollar, Mr O'Leary said.
While Ryanair has only dealt with Seattle-based Boeing to date, he said: "It is also manageable for us to give the order to Airbus."
Ryanair's fleet currently stands at 166 planes. It is set to grow to 195 by March 2009 and 265 by March 2012 as the result of a fleet replacement and addition programme linked to its opportunistic plane deal with Boeing in the wake of the September 11 attacks.
Mr O'Leary did not indicate to the German newspaper a period over which it plans to acquire the planes, and a spokesman yesterday declined to give an approximated timeframe to this newspaper.
Analysts said, however, that the significance of a deal largely depends on the timescale involved.
"Ryanair replaces planes every eight years. If they were talking about buying 400 between 2012 and 2020, that would equate to 265 replacements and 135 additions -- representing fleet growth of about 10pc a year," said one.
"If they were planning to take in over 400 planes over three years, that'd be much more significant."
Another industry observer said Ryanair was "very unlikely" to be able to secure its next plane orders at the same discount as the 2001 order.
This would lead to a significant step up in cost base.
Meanwhile, Mr O'Leary said he expects sky-high oil prices -- which resulted in the group's net profit slumping 85pc in the second quarter -- will continue to pull back. "The price of oil will fall under $100 again because demand is declining," he said.
He added: "There is no lack of oil."
Oil prices have pulled back from record highs above $147 a barrel to below $120 this week.
Should oil prices not retreat below the $100 mark, O'Leary warned that only between thee and five carriers in Europe would survive -- "including Ryanair and, perhaps, Easyjet".
The airline boss said that Ryanair would profit from a deep economic downturn, as cost-conscious business travellers would switch from the established airlines in this scenario.
- Joe Brennan and Laura Noonan
