Ryanair's Profits Hit by Lower Fares, Higher Costs -- Update

By Doug Cameron 

Ryanair Holdings PLC said further delays in the return to service of Boeing Co.'s 737 MAX would lead to job cuts and less flying during next year's peak summer travel season.

One of Boeing's biggest customers, Ryanair had expected to receive the first of 135 MAX jets it has ordered this past April. But the planes have been grounded by global regulators since March, after two fatal crashes in six months that killed 346 people.

Ryanair has yet to receive any of the jets, and now expects it will end its 2020 fiscal year with as many as 30 of the MAX aircraft, rather than the 58 it has contracted to receive by then.

"I think there is going to be significantly less capacity in Europe in summer 2020, in part, because of the MAX delays," Ryanair Chief Executive Michael O'Leary said Monday, warning that further schedule slippages could leave the airline with no MAX jets next summer.

Boeing is aiming to have software changes to the MAX approved by regulators in the fourth quarter, but some carriers and officials don't expect the plane to be cleared to fly again until early next year.

Mr. O'Leary said while Ryanair is in talks with Boeing over possible follow-on orders, it is also adding to the fleet of Airbus SE jets flown by its Lauda unit. Airbus is "pricing very aggressively at the moment," Mr. O'Leary said as the Ireland-based carrier a reported forecast-beating quarterly profit on Monday and left its fiscal 2020 guidance unchanged.

Ryanair said further delays in the return of the MAX and pricing pressures in the U.K. and German markets could trigger job cuts and the possible closure of some of the carrier's airport bases.

He said he also expects more European discount airlines to go out of business this winter, noting plans by Norwegian Air Shuttle ASA -- a significant MAX operator -- to close some of its own airport bases this fall.

Mr. O'Leary said Ryanair remains committed to the MAX, and didn't expect it would have to market the plane differently from its existing 737 fleet when it starts service. Ryanair has its own MAX pilot-training simulator and could accept as many as eight new planes a month he said.

Boeing has set aside an initial $5.6 billion in compensation for MAX customers, though analysts expect only a small portion to be paid in cash, with the bulk in discounts on future plane deals and aircraft services.

(END) Dow Jones Newswires

July 29, 2019 14:06 ET (18:06 GMT)

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