Ryanair Chief Rules Out Boeing Max Arrival Until Next Summer

(Bloomberg) --

Ryanair Holdings Plc Chief Executive Officer Michael O’Leary said he won’t take delivery of Boeing Co.’s 737 Max jetliner until summer 2021 as air travel claws its way back from the coronavirus outbreak.

Europe’s biggest discount airline is one of the main customers for the Max with 210 orders. The jet had been grounded for a year after two fatal crashes by the time the pandemic hit European flights, and O’Leary said in an interview Friday that Ryanair doesn’t now want the planes until markets return to normal.

The Irish carrier is banking on the collapse of weaker rivals to drive growth, O’Leary said. Its flights should reach about 40% of the usual schedule in the month they resume, most likely late June or early July, increasing to 60% by September, the last month of the summer season, he predicted.

The winter timetable may operate at more-usual levels as price wars prompt people to make up for missed summer vacations.

“It would be stimulated by very aggressive airline pricing, hotel pricing, package holiday pricing,” the CEO said. Fares should return to normal by summer 2021, providing “significant growth opportunities” in a market opened up by the collapse of Britain’s Flybe Plc and Deutsche Lufthansa AG’s decision to close Germanwings, on top of the 2019 failure of Thomas Cook Group Plc.

Fleet discussions with Boeing have had to take a back seat as Covid-19 has roiled the travel industry, but will “return pretty rapidly” once the crisis eases, O’Leary said. He said he expects the Max to win re-certification and return to the skies for the first time since its grounding in July or August.

Approval Delay

Approval of the Max’s redesigned flight-control software is increasingly likely to slide a month or two, “due in large part to strained logistics,” analyst Carter Copeland of Melius Research said in a note to clients. He was referring to the challenges of completing reviews when regulators are self-isolating on different continents and of getting pilots to Seattle to conduct final testing.

“We don’t yet anticipate large increases in Max settlements this quarter as a result of the potential slippage,” Copeland said in the April 22 report, saying that the jet’s return would still fit within the company’s previous “midyear” timetable.

Boeing dropped 6.4% to $129.05 at 11:57 a.m. in New York, the sharpest decline on the Dow Jones Industrial Average. Ryanair rose 2.1% to 9.62 euros in Dublin.

Ryanair is waiting on the higher capacity Max 200 variant which will take a few more months to gain clearance. The CEO said at the start of March that he expected to take his first planes in September or October, a prediction he said now sounds like “a century ago.”

O’Leary didn’t rule out switching to jets from Boeing’s arch-rival Airbus SE, but said the European company would need to cut its prices.

Ryanair doesn’t plan to raise cash by selling and leasing back aircraft, he said, unlike other carriers that are looking at the option to increase liquidity.

“The problem is that if you’re trying to do sale and leaseback now, you’re doing it at distressed prices and high interest rates,” the CEO said. “We don’t need the money and we wouldn’t want those kinds of high costs.”

©2020 Bloomberg L.P.