Business Irish

Wednesday 23 October 2019

Ryanair in talks with Boeing on 737 Max compensation

A Boeing 737 MAX 8 jetliner takes off on a test flight (Ted S. Warren/AP)
A Boeing 737 MAX 8 jetliner takes off on a test flight (Ted S. Warren/AP)
John Mulligan

John Mulligan

RYANAIR is in talks with Boeing regarding potential compensation after the grounding of 737 Max jets around the world, according to CEO Michael O'Leary.

But he declined to say how much the carrier could seek from the aircraft maker.

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Mr O'Leary also warned that any significant further delays with the recertification of the jet by safety authorities which result in the aircraft being unavailable for summer 2020 would mean "a year of historically, by our standards, very low traffic growth". Ryanair has a firm order for 135 Max 8 jets, and an option on 75 more.

"We are in an ongoing dialogue with Boeing," said Mr O'Leary. "I'm sure we will work something out with Boeing, whether that's compensation or something on the price of the aircraft - not sure yet.

"That's a discussion that we are having with our partners at Boeing, but not one we'd comment on publicly."

Boeing 737 Max jets have been grounded since soon after a deadly crash of one of the aircraft in service with Ethiopian Airlines in March.

That followed a fatal crash last October of a Max jet operated by Indonesia's Lion Air. An anti-stall system used on the jets played a key role in both crashes.

Mr O'Leary said he still expects to have 50 of the aircraft in service for next summer, with deliveries likely to start in the autumn. He also said he thinks any residual passenger concerns about the aircraft's safety will quickly dissipate once they're back in service.

"Our sense is, and the growing sense within the industry is, that the Max will be back flying in North America probably by the end of June or sometime in July," he said, adding that other agencies including the European Union Aviation Safety Agency, will "probably" take another month to recertify the jet.

Ryanair will use a variant of the aircraft that has two extra doors.

"We've notified Boeing that we're not taking these aircraft until the end of October-November," said Mr O'Leary. He added that some of the jets will probably be in service by the winter with Ryanair.

Mr O'Leary was speaking as Ryanair blamed lower fares for a 29pc slump in profit to €1.02bn for the 12 months to the end of March. Profits are likely to be flat this year.

Revenue for the period was 6pc higher at €7.6bn as Ryanair's passenger numbers rose 7pc to 139.1 million. The airline benefited from strong ancillary revenue growth, which was up 19pc at €2.4bn.

Shares in Ryanair tumbled more than 5.3pc in early trading, even as it announced a €700m share buyback.

"The shares are very lowly priced," said Mr O'Leary. They're down more than a third in the past year.

"This is not a time when anybody else should be buying shares," he said.

"I would ask you to wait until we've completed our share buyback before you start placing your orders."

Irish Independent

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