Tuesday 28 March 2017

Ryanair pushes for new engines on Boeing jets to cut fuel costs

Fuel accounts for almost 40pc of the airline’s expenses. Photo: Bloomberg News
Fuel accounts for almost 40pc of the airline’s expenses. Photo: Bloomberg News

Ryanair, which runs the biggest fleet in Europe of Boeing 737 single-aisle aircraft, said the manufacturer should fit new engines on the jet to help carriers cut fuel costs as an all-new model remains years away.

Fuel accounts for almost 40pc of the airline’s expenses, and a manufacturer that could deliver a plane with 12 to 14 percent higher fuel efficiency would let Ryanair cut its costs per passenger by 10 to 12 percent, Chief Financial Officer Howard Millar said in a telephone interview.

“It’s a very significant number that you can’t ignore,” Millar said yesterday. “We’re obviously very interested” in the concept of new engines, the executive said.

Boeing and Airbus SAS are weighing the merits of an upgrade as they seek to sustain demand for their best-selling planes.

Both companies are planning to raise production rates of their single-aisle planes, and single-aisle planes, and both aim to decide before the end of the year whether they will offer new engines on existing models.

Millar said his preference would be an all-new single-aisle aircraft that could offer even greater savings than a so-called re-engined model.

However, delays on recent aircraft programs show that manufacturers tend to struggle to maintain their proposed launch schedules for new jets, he said.

Engineer shortage

“Boeing’s talking about maybe building a new plane for 2020, but what is that date realistically?” Millar said. “It’s probably a bit further out. The ability of any manufacturer to deliver anything on time has to be questioned these days.”

Both planemakers have publicly discussed the option of new engines for the past year, with neither side making a firm commitment.

Boeing Chief Financial Officer James Bell told investors in August that customers “haven’t shown a real interest” in a re-engined aircraft.

While Airbus has been more open to embrace the concept, the company has cautioned that embarking on the project may cause a shortage of engineers on other programs, such as the A380 superjumbo that’s only lately been stabilised, and the A350 wide-body jet that Airbus wants to bring to the market by 2013.

Boeing faces similar concerns, as its engineers finish work on the delayed 787 Dreamliner and 747-8 jumbo jet and begin revamping the 777 to better compete with the A350.

Ryanair operates 250 Boeing 737-800 planes, and no Airbus aircraft. The carrier plans to increase its fleet to 299 jets by March 2013.

The average age of its jets is three years. The low-cost carrier walked away from an agreement last year to buy 100 additional Boeing aircraft, with options on 100 more, after the two parties couldn’t agree on terms.

More complex

Fitting new engines on the Boeing model is more complex than on the Airbus, because the wings sit closer to the ground, requiring changes to parts including landing gear.

The cost of an all-new jet is about $10bn, while Airbus estimates new engines would cost no more than €1.5bn and be ready for service around 2015.

While new engines promise to cut specific fuel consumption by about 15pc, the savings on direct costs to airlines would translate into just half that amount as fuel is only part of the cost in operating planes.

Another compromise is a likely cut to payload or range, as the new engines are heavier.

The power plants on offer are manufactured by Pratt & Whitney and CFM International, a joint venture between General Electric Co and France’s Safran. For now, The 737 operates on CFM engines only, while the Airbus A320 has two engine options.

“It’s really a decision for the manufacturers,” Millar said. “It’s still evolving as to what they’ll do. Boeing has talked about it, Airbus seems closer to doing it, but obviously we’re very interested in what’s going on in that space.”

Bloomberg

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