First Free Story (1 of 3)Join Skift Pro
Ryanair CEO Michael O’Leary has told Boeing to hurry up and sort out the problems with its Max aircraft so that it can start flying them sooner rather than later.
Uncertainty over when it will actually take delivery of the new jets has forced the airline to scale back its growth plans. Ryanair now isn’t expecting to start flying the Max until February or even March, 2020.
Boeing is currently working with the regulators including the U.S. Federal Aviation Administration and the European Union Aviation Safety Agency to try and get the Max up in the air again. The aircraft was grounded across the world earlier this year after two fatal crashes.
“We were originally expecting 58 aircraft for the summer of 2020, that’s now 30 at best. It may well move to 20, it could move to 10, and it could well move to 0 if Boeing don’t get their shit together pretty quickly with the regulators,” O’Leary said on an earnings call after the release of Ryanair’s first-quarter results.
Despite the setbacks, O’Leary is still a big believer in the aircraft which he said would be the most “certified, most audited aircraft” when it eventually comes back to service, adding that it knocks the rival Airbus A321 model “out of the park”.
In the meantime though base closures and redundancies are a possibility.
The Max situation isn’t the only headache for Ryanair the threat of a no-deal Brexit has reappeared thanks to Boris Johnson becoming UK Prime Minister.
“Brexit and the risk of a hard Brexit has significantly materially increased we think with the new government in the UK,”
In the event of a no-deal Brexit, the UK and European Union have previously guided that flights would continue as normal but this arrangement is only in place until March 2020. Ryanair recently amended the terms of its $778 million (€700 million) share buyback to make sure it complies with EU ownership rules in the event of a no-deal or hard Brexit.
“It seems the UK government are determined to leave without a deal. We don’t believe there will be any move by the European Union to assist them or help them. If they are determined to leave without a no deal, we believe the European Union will say ‘good luck’ because that is a political issue, not an economic issue for the European Union. So this is the time I think for great caution,” O’Leary said.
Ryanair reported a 24 percent drop in pre-tax profit to $292 million (€262 million) on the back of increased fuel and staff costs as well as lower fares. Revenue rose 11 percent to $2.6 billion (€2.3 billion).
With such a difficult operating environment, Ryanair has limited visibility over its performance for the rest of the year but is still expecting flat post-tax profit growth with an estimate of between $834 million (€750 million) to $1.1 billion (€950 million).
Strangely enough, in the cut-throat world of low-cost carriers, this might actually be a good thing for Ryanair.
“We’re in a very challenging environment, and of that challenging environment will come lots of opportunity if you are the lowest-cost operator. We are the lowest-cost operator,” O’Leary said.