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Ryanair's jet deal may call for a credit rating


Ryanair chairman David Bonderman

Ryanair chairman David Bonderman

Ryanair chairman David Bonderman

Ryanair has confirmed that it may have to obtain a credit rating if it decides to use borrowing to help finance its purchase of 175 aircraft from Boeing.

In a circular just posted to shareholders, Ryanair said that it's considering a variety of funding options for the aircraft purchase, which it unveiled in March.

The airline's chief financial officer, Howard Millar, also noted last week that such a move may be necessary depending on how the airline structures its purchases.

The letter to shareholders – who'll be asked to vote on the aircraft purchase on June 18 – also confirms that Ryanair got "substantial discounts" on the $78m (€60m) list price of each 737-800 aircraft ordered. That means the total list price of about $13.6bn (€10.5bn) is much higher than what Ryanair actually paid.

It has been speculated that the airline may have secured a discount as deep as 50pc on its order.

Ryanair chairman David Bonderman said "credit memoranda and promotional allowances" agreed with Boeing "will reduce the effective price of each new aircraft to Ryanair significantly below the basic price mentioned and is not dissimilar to the net price agreed for the aircraft delivered under the 2005 Boeing contract".

Ryanair noted that the basic price of each aircraft is increased by nearly $2.9m (€2.2m) for the installation of certain "buyer-furnished" equipment.


The carrier said the scale and nature of the price concessions it received from Boeing are "commercially sensitive and confidential".

Ryanair noted that the first delivery of the new order is due to be made in September 2014, when it's set to receive two of the aircraft. It will receive 11 in the financial year to the end of March 2015; 35 the next financial year; 50 the next; 50 in the 2018 fiscal year; and 29 in 2019.

Following the planned disposal or return of existing aircraft, Ryanair will be left with a fleet of 375 aircraft by 2019.

"The phased delivery of the new aircraft should provide Ryanair with sufficient capacity to achieve an increase in passenger volumes to approximately 100 million passengers per annum by March 31, 2019," Mr Bonderman said.

Ryanair aims to have a 20pc share of Europe's air traffic by 2020.

"The board believes that the transaction will ensure that Ryanair has sufficient aircraft to implement its long-term growth plan and demonstrates to customers, shareholders and potential investors, Ryanair's commitment to execute its long-term plan to open new routes and bases throughout Europe," he added.

However, the airline warned: "The current recession and governmental austerity measures in place across Europe mean that Ryanair may be unable to expand its operations due to lack of demand for air travel.

"Furthermore, the possible breakup of the euro and resulting financial crisis could also lead to a dampening of demand for air travel."

Irish Independent