Ryanair is demanding compensation from Boeing for worsening aircraft delivery delays that have forced the airline to lower its forecasts for passenger numbers and warns it is on the cusp of cancelling some flights this summer.
Michael O’Leary, Ryanair’s chief executive, said he was “genuinely not sure” how many 737 Max aircraft Boeing will deliver in time for the peak summer months, noting the US aerospace company was plunged into a manufacturing “shit show” after the fuselage blowout on an Alaska Airlines flight in January.
Boeing has encountered intense scrutiny over the incident, and the US aviation regulator has blocked it from expanding production of the 737 Max, its most popular plane.
Alaska Airlines and Panama’s Copa Airlines have called for Boeing to compensate for the losses caused by the incident and the subsequent grounding of planes. Mr O’Leary’s comments show Boeing could face more compensation claims for the delays across its production process.
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“There is a debate with Boeing as to whether we’re entitled to some compensation for these delayed deliveries,” Mr O’Leary said at a press conference on Friday.
He said the discussions centred on whether the production issues constituted “excusable delays”, which would not be liable for compensation as laid out in the contract with Boeing.
“We’ve been very firm with the view it’s inexcusable,” he said, adding: “Our growth has been constrained because at this point in time we don’t really know how many aircraft we are going to get ... there is a shit show going on in [Boeing’s main production line] Seattle.”
Ryanair had expected to receive 57 737 Max-8 aircraft by June to deploy over the peak summer months, but has been regularly revising down its estimates as manufacturing issues have gripped Boeing.
“Boeing would try to claim that it’s excusable. I think we will get some modest compensation out of Boeing. But our focus is not getting compensation out of Boeing, our focus is getting the bloody aeroplanes out of them,” Mr O’Leary added.
He said his airline would probably receive between 40 and 45 aircraft, although the number could fall below 40. Ryanair’s summer 2024 schedule is based on receiving at least 50 aircraft from Boeing, and Mr O’Leary said the airline would have to announce “minor schedule cuts” by the end of March if only 40 arrived by the end of March.
He said Ryanair would cut flights from routes with multiple daily frequencies to avoid disruption to customers. “We will be able to offer affected customers alternative flights on the same day or other days.”
[ Holidaymakers face higher summer fares due to lack of planes, says Ryanair bossOpens in new window ]
Ryanair now expects to carry 183.5 million passengers in its current financial year ending in March, down from a planned 185 million. However he added that the Boeing problems would hit passenger numbers in its following financial year, which will be “towards 200 million” instead of a forecast 205 million.
Mr O’Leary said demand for flying had “never looked” brighter, but the engineering issues, which have also hit other airlines because of inspections on engines used on some Airbus aircraft, would result in higher fares for customers.
He said the airline was “on track to make something around €1.9 billion” in profits this year. The airline guided it would make between €1.85 billion and €1.95 billion in its most recent results in January.
Mr O’Leary, whose growth ambitions are reliant on Boeing aircraft, has been consistently supportive of the company’s top executives despite the production problems.
Some other airlines bosses, including at United Airlines and Emirates, have been harsher in their criticism as frustration among Boeing customers grows.
Boeing said it was communicating with customers over some delivery schedules. It added: “We deeply regret the impact this is having on our valued customer Ryanair. We’re working to address their concerns and taking action on a comprehensive plan to strengthen 737 quality and delivery performance.”
– Copyright The Financial Times Limited 2024
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