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Ryanair's €17bn 'game-changer' jet order to heap pressure on rivals

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Michael O'Leary, CEO of Ryanair

Michael O'Leary, CEO of Ryanair

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Michael O'Leary, CEO of Ryanair

Ryanair's $22bn (€17bn) order for up to 200 new Boeing aircraft will eventually see it save millions of euro a year from greater efficiencies and lower fuel costs, according to chief executive Michael O'Leary.

He described the order - the biggest ever by and Irish company - as a "game-changer" for Ryanair and the airline industry in Europe.

The carrier has committed to buying 100 Boeing Max 200 jets and has an option to buy 100 more.

Mr O'Leary said the airline is almost certain to convert the options into orders. He said Ryanair has never not converted options it had for aircraft into firm orders.

The aircraft purchase will place enormous pressure on flag carriers around Europe, including Aer Lingus. As part of its expansion plans, Ryanair is targeting primary airports that have traditionally been served by older airlines.

Analyst Stephen Furlong at Davy Stockbrokers said the order should improve Ryanair's competitive advantage and see it grow its market share in Europe to about 25pc by 2024.

Shares in Ryanair rose earlier in the day, but closed down just under 1pc. Mr O'Leary said Ryanair had paid more for the aircraft compared to past orders, where he has traditionally secured steeper discounts.

Mr O'Leary predicted that Ryanair will carry 150 million passengers a year by 2024. It currently carries 81m a year.

Speaking to the Irish Independent, Ryanair chief financial officer Howard Millar said that the 100 options would have to be exercised by 2018 so deliveries of those aircraft could begin by 2020.

The 100 firm orders will be delivered between 2019 and 2023.

They come on top of another huge order for 180 Boeing aircraft placed last year by Ryanair.

Mr O'Leary and Mr Howard were among the Ryanair team heading to Seattle yesterday to take delivery of the first jets under that order.

Mr Millar said that buying the 200 jets would see Ryanair boost its workforce to around 15,000 from the current 9,500.

Mr O'Leary said the 727 Max 200 is the "aircraft we've been waiting for in Ryanair probably for about 10 years" and will enable the airline to have a "controlled rate of growth" in the next 10 years and to offer lower fares.

Each new aircraft will carry 197 passengers - eight more than onboard the current 737s Ryanair is using.

"We're going to expand and grow very strongly in Europe, both in new markets and also going in and taking traffic away from incumbent carriers."

Mr O'Leary said having the extra eight seats on the aircraft will have an immediate revenue impact.

"Those eight extra seats, on an aircraft operating six times a day with an 85pc load factor, with a €50 average fare, will generate about $1m (€773,000) in revenue annually per aircraft."

"This truly the game-changer aircraft," he said. The Max jet also uses 20pc less fuel than the existing 737.

"It's going to change the game for low-fare air travel. It's certainly going to change the game in Europe in the next 10 years."

Irish Independent