Ryanair Cuts Growth Forecast on Delayed Delivery of Max

 - July 16, 2019, 8:57 AM

The continued grounding of the Boeing 737 Max has influenced Ryanair’s capacity plans and forced Europe’s largest low-cost carrier (LCC) to revise downward its passenger growth outlook for the next financial year. In an update to investors Tuesday, Ryanair said it cut its summer 2020 growth rate from 7 percent to 3 percent because its fleet will contain 28 fewer Boeing Max 200s than expected. The LCC had planned to have 58 of the type for its summer schedule next year, but since the Max 8 and 9 remain grounded it now anticipates receiving up to 30 Max 200s by the end of May 2020.

“This shortfall in aircraft deliveries will necessitate some base cuts and closures for summer 2020, but also for the winter 2019 schedule,” said Ryanair CEO Michael O’Leary. As a result, the Dublin-headquartered group trimmed its traffic forecast for the financial year ending March 31, 2021, to 157 million passengers, down from an earlier forecast 162 million.

Ryanair placed firm orders for 135 Max 200s and reserved options for an additional 75. Its Max 200s carry 197 seats, eight more than the standard 189 in its existing fleet of 737-800s. Original schedules called for it to take delivery of its first Max 200 in April.

The exact date of the type’s return to service remains “uncertain,” O’Leary noted. “Boeing is hoping that a certification package will be submitted to regulators by September with a return to service shortly thereafter,” he said. “[However], we believe it would be prudent to plan for that date to slip by some months, possibly as late as December. As Ryanair have ordered the Boeing Max 200s, which are a variant of the Max aircraft, these need to be separately certified by the FAA and EASA. Ryanair expects that the Max 200 will be approved for flight services within two months of the Max return to service.”

Consequently, the airline now “hopes” to receive its first of the high-density Max jet “sometime between January and February 2020.”

Ryanair’s can accept delivery of only between six and eight new aircraft each month, O’Leary explained, hence the 30 Max aircraft by the end of May. “This number could rise, or fall further, depending on when the 737 Max actually returns to flight services,” he cautioned. “Ryanair will continue to work with Boeing and EASA to recover these delivery delays during the winter of 2020, so that we can restore our growth to normal levels in summer 2021,” he added, while stressing the airline remains “committed” to the model. Last week, while speaking to journalists in Brussels, he lauded the aircraft’s environmental performance, explaining the Max 200 will reduce Ryanair’s CO2 emissions by 16 percent per seat compared with the 737 NG.

The airline said it has started talking with airports to identify which underperforming or loss-making bases to close or on which to reduce services starting in November. Ryanair said it will consult with its employees and unions.