Ryanair May Pare Growth Plans If Max 737 Grounding Drags On

(Bloomberg) -- Ryanair Holdings Plc will need to pare back its growth plans for next summer if the grounding of the Boeing Co. 737 Max drags on late into this year.

Chief Executive Officer Michael O’Leary is set to meet with Boeing in the next two weeks, when the discounter will push for a specific date for the plane’s return to service, O’Leary told reporters in Brussels. Boeing is currently indicating the Max should be flying again by the end of September, he said.

“We have to work with the dates we’re given from Boeing, it’s just we don’t at the moment have that much faith in the dates we’re being given,” O’Leary said. “We need a delivery schedule: When is the aircraft going to be back flying? And we need a date, not some kind of speculation.”

Boeing has been in crisis mode since regulators grounded the best-selling Max in March, after two crashes killed 346 people.

Ryanair is the largest customer of a new version, outfitted with more seats, dubbed the Max 200. The budget carrier had been preparing to take the first of 135 planes on order when Max flights were halted worldwide.

Signs that the Max’s planned reentry into service is slipping were echoed by Norwegian Air Shuttle ASA. Chief Financial Officer Geir Karlsen said Thursday that its Max jets now won’t return to the skies before October at the earliest, after previously being guided for the end of August.

Ryanair shares added 0.4% to 10.11 euros as of 8:51 a.m. in Dublin. That pared the stock’s decline this year to 6%.

The carrier expects that it will take Boeing about two additional months to have the new model ready for deliveries after the grounding is lifted. So if the Max returns to service in September, Ryanair should begin receiving its first Max-200 planes by the end of November.

That time line would allow Ryanair to take delivery of about 45 to 50 of the jets by next summer, at a rate of six to eight a month, O’Leary said. If the grounding drags on longer, though, Ryanair will need to pare back its capacity plans.

“Our concern at the moment is how do we get the plane back flying at the earliest possible date so that we can take delivery of the aircraft we have ordered and minimize the disruption for summer 2020,” O’Leary said. “I don’t want to have closed bases, I don’t want to have to cut aircraft at certain bases.”

The discounter, Europe’s biggest, is still likely to convert its remaining options for 75 Max aircraft, which would raise its order book to 210 jets, the executive said. O’Leary is also in talks with Boeing about a new order to feed Ryanair’s fleet beyond 2024, but “there’s no pressure” to make a decision in the short-term, he said.

--With assistance from Maria Tadeo.

To contact the reporters on this story: Benjamin Katz in London at bkatz38@bloomberg.net;Simon Foy in London at sfoy8@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Andrew Noël

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