Ryanair has placed an order with Boeing to take up to another 140 aircraft, valued at $5 billion-$9 billion (€3.8 billion-€6.8 billion) to support its plans to carry 70 million passengers and become Europe's biggest airline over the next seven years.
The Boeing 737-800 is the US manufacturer's next generation of aircraft.They are more efficient to run and offer potentially huge cost savings for the airline.
Ryanair yesterday placed a firm order for 70 aircraft with options over another 70 that are due for delivery between 2008 and 2012, bringing its total fleet potentially to over 400. In addition, the agreement with Boeing also includes the modification of its existing 747-800 fleet to make them as efficient in terms of fuel consumption as the new aircraft.
Speaking in London, Ryanair chairman, Mr David Bonderman, said the deal would mean even lower fares for consumers. "We intend to become Europe's largest airline. We will do so by using the best short-haul aircraft in the business, by offering even lower fares to our passengers and by creating over 2,500 new highly paid jobs in existing and new bases all over Europe."
The airline, which is one of Boeing's biggest customers, refused to discuss the scale of the discounts it had secured, although analysts believe it could be as much as 50 per cent off the list price. Boeing said the agreement for 70 planes was $4.6 billion and if all the options are exercised this rises to $9.2 billion.
The deal, which must be approved by Ryanair shareholders, was viewed positively by investors and is seen as securing a long-term low-cost base for Ryanair far ahead of its competitors. Mr O'Leary, said the deal would reduce the airline's cost per passenger by 50 per cent across its entire fleet and would mean savings of about €100,000 on fuel costs annually per aircraft.
Ryanair shares rose on the news, closing up 2 cents in Dublin at €6.16
The airline expects to carry more than over 28 million passengers this year, rising to 34 million in 2006. With the new aircraft it intends to double this to 70 million by 2012 overtaking British Airways and Lufthansa as Europe's biggest carrier in terms of passenger numbers.
The airline would need to open 30-35 new bases across Europe to achieve those passenger numbers and says it has already identified 41. The new bases will be across the EU member state and it has no plans to move into Eastern Europe over that period.
Mr O'Leary repeated that he would not be basing any more aircraft in Dublin until a second terminal was built at the airport. Ryanair "lives in hope" that the Government will deliver on its promise to establish a new terminal in Dublin before the next general election, he said.
Earlier this year, Ryanair relented on its position not to open new routes from Dublin and announced flights to new destinations in the UK and Europe.
Mr O'Leary remained cautious about the outlook for the sector.
