Ryanair bases facing closure over jet issues
Budget airline set to take hit of €275million over grounding of new planes
RYANAIR customers were left in the dark last night over the implications of the company’s announcement that it plans to cut and even close some of its bases ‘short-term’ due to safety issues surrounding the new Boeing 737 Max jet.
The company ordered several dozen of the planes for its fleet, but failed to clarify last night if the cuts would impact existing flights.
Ryanair did not respond when asked by this paper if anyone who has already booked a flight with the airline could have it cancelled because of the problems.
The budget airline’s 2020 growth plans will be affected as a result of the situation – as it will take a shocking €275million hit from its new Boeing planes being grounded because of safety issues around the 737 Max jet.
Ryanair boss Michael O’Leary warned yesterday that passenger forecast numbers were being cut by 5million next year because of the problems with the new planes. The airline rakes in €55 per passenger from fares and other extras, which means a revenue drop of €275million is on the cards.
Ryanair expects its new jets to start arriving around January and February of next year, continuing up until May, and once tests are carried out they will be fully operational from next summer.
Despite the announcement, the airline’s share price rose by almost 3% to €10.37 as investors had probably expected the news to be worse and the new planes to enter service even later. The problems caused by the new planes means the airline also plans to cut and even close some of its bases ‘short term’. However, it has not said which ones and is about to assess which ‘under-performing or lossmaking bases’ face the axe.
Boeing 737 Max jets were grounded around the world in March after two newly delivered planes crashed five months apart, killing all onboard. The accidents were on Lion Air Flight 610 in October last year in the Java Sea off Borneo, and Ethiopian Airlines Flight 302 in March just after takeoff from Addis Ababa Bole International Airport.
Mr O’Leary said: ‘Ryanair remains committed to the B737 Max aircraft, and now expects that it will return to flying service before the end of 2019. However, the exact date of this return remains uncertain.
‘Boeing is hoping that a certification package will be submitted to regulators by September, with a return to service shortly thereafter. 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 Max200s, which are a variant of the Max aircraft, these need to be separately certified by the FAA [Federal Aviation Administration in the US] and EASA [European Union Aviation Safety Agency]. Ryanair expects that the Max200 will be approved for flight services within two months of the Max return to service.’
Mr O’Leary added that, accordingly, Ryanair ‘now hopes to receive its first Max200 aircraft sometime between January and February 2020’. He continued: ‘Since Ryanair can only take delivery of between six to eight new aircraft each month, we are now planning our summer 2020 schedules based on taking up to 30 B737 Max aircraft deliveries up to the end of May 2020.
‘This is less than the 58 Max aircraft Boeing originally scheduled to deliver for our summer 2020 schedule. This number could rise, or fall further, depending on when the B737 Max actually returns to flight services.’
Mr O’Leary said that for planning purposes, Ryanair ‘will now revise its summer 2020 schedule based on 30 incremental aircraft, rather than 58’. He added: ‘This will cut Ryanair’s summer 2020 growth rate from 7% to 3%, and means full-year traffic growth for the year to March 2021 will be cut from 162million guests to approximately 157million.
‘This shortfall in aircraft deliveries will necessitate some base cuts and closures for summer 2020, but also for the winter 2019 schedule.
‘We are starting a series of discussions with our airports to determine which of Ryanair’s under-performing or loss-making bases should suffer these shortterm cuts and/or closures from November 2019.’
Mr O’Leary continued: ‘We will also be consulting with our people and our unions in planning and implementing these base cuts and closures, which are directly caused by the B737 Max delivery delays to the B737 Max programme.
‘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.’
Ryanair has already announced it is cutting flights at Belfast International Airport this winter. It is dropping its three Polish routes to Gdansk, Warsaw and Wroclaw as well as flights to Malta.
The airline is also reducing the number of flights it operates to London Stansted and Manchester airports. However, a spokesman for Dublin Airport said it does not expect its routes to be cut.
‘Dublin is performing extremely well for airlines in general, passenger traffic is up 6% in the first six months of the year. Ryanair has grown its business very successfully from here in recent years and there is no evidence to suggest that Dublin is a poor-performing base and therefore vulnerable,’ the spokesman said.
Travel industry expert Eoghan Corry, of travelextra.ie, said: ‘I think Ryanair will see this as an opportunity to squeeze Boeing’s terms; in other words, “get a few bob off the price”.
‘The history of the relationship between the two is: Boeing’s difficulty is Ryanair’s opportunity.
‘Boeing knows that everything Ryanair does sends a message to
The airline rakes in €55 per passenger Expects carrier to seek better terms
the entire industry and if Ryanair propose a vote of confidence in Boeing, it will have an impact on their sales.’ And Mr Corry expects Ryanair will start looking for better terms from Boeing.
The aircraft’s grounding will cost the region served by Shannon Airport €58million this year, according to Shannon Group boss Mary Considine. The airport is used by Norwegian Air, which has B737 Max planes as part of its fleet.
Ms Considine told a meeting of Clare County Council at the beginning of the week that the loss of 120,000 passengers from three services affected by the Boeing Max grounding will end six years of passenger growth at the airport. She said: ‘They are the facts and the hard reality because you can’t replace those services overnight.
‘We want the airport to not only succeed but to grow.’