Boeing Wins $40 Billion Ryanair Order for 737 Max Jets
Comment of the Day

May 09 2023

Commentary by Eoin Treacy

Boeing Wins $40 Billion Ryanair Order for 737 Max Jets

This article from Bloomberg may be of interest. Here is a section: 

The huge commitment to Boeing’s largest 737 variant marks an important endorsement from one of the US manufacturer’s most loyal customers and highlights how carriers are willing to splurge on fleet upgrades again as air travel rebounds. Ryanair said the deal —  the largest order ever placed by an Irish company for US manufactured goods — was more expensive than its current crop of 737 deliveries. 

“We paid more per seat but we’re still incredibly happy with the deal we’ve done,” Chief Executive Officer Michael O’Leary said at a news conference. “We think the extra seats give us the revenue-earning potential.”

Deliveries will start in 2027 and run through 2033. Ryanair said discussions surrounding the purchase started in January, and half the order is earmarked for replacement of older 737NG models while the other half is reserved for growth.

Eoin Treacy's view

From Boeing’s perspective this is a big vote of confidence in the 737 Max. Considering several of the aircraft have fallen out of the sky, there was understandable reticence among customers to buy them.  Boeing is obviously hoping this order will mark a recovery for commercial aircraft sales.

The timeline for the sales, with deliveries beginning in 2027 and stretching through 2033, highlights just how long the lead times are on aircraft orders. That’s particularly relevant as the media gushes over the prospects of battery powered flight. Some commuter aircraft may be electric in the next few years, but rejigging the global fleet of aircraft would take decades.

Pressure will continue to be exerted on the airline industry to be more fuel efficient and carbon taxes are likely to be added to airlines tickets to deter discretionary travel. That suggests the airline industry is set to become even more competitive.
Ryanair has been ranging in a volatile manner for the last several years, but it is a winner in the price war and the share is firming within its range.
Boeing continues to pause in the region of both the 200-day and 1000-day MAs. A boost in military spending is probably required to spur a return to medium-term demand dominance.

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