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Aircraft industry

Boeing Agrees to Sell 70 Aircraft to Ryanair for $4.6 Billion

Strategic Insights

— 2 min read

The Irish low-cost airline Ryanair has reached a deal with Boeing to purchase 70 aircraft, with options to buy a further 70, for $4.6 billion. This massive order, seen as a significant boost to Boeing's order book, is expected to enable Ryanair to increase its passenger traffic from 27 million to 70 million by 2012. The aircraft will be delivered between 2008 and 2012, filling a gap in Boeing's order book that would have emerged by the end of the decade.

Key Takeaways:

  • Ryanair has agreed to purchase 70 Boeing 737-800 jets, with options to buy a further 70, for $4.6 billion, representing a discount of over half the list price of the jets.
  • The deal is expected to fill a hole in Boeing's order book that would have emerged by the end of the decade.
  • Ryanair plans to use the new aircraft to increase its passenger traffic from 27 million to 70 million by 2012.
  • The carrier will use the aircraft to build extra bases in Europe, potentially serving major cities such as Paris, Oslo, Seville, Hamburg, and Berlin.
  • Ryanair's chairman, David Bonderman, predicts that unit operating costs, excluding fuel, will continue to fall over the next five years.
  • The airline is also exploiting low airport charges as a key pillar of its highly profitable cost structure.

Statistics:

  • 70 aircraft will be delivered to Ryanair between 2008 and 2012.
  • The deal is worth $4.6 billion, with each aircraft priced at between $25 million and $30 million.
  • Ryanair's passenger traffic is expected to increase from 27 million to 70 million by 2012.
  • The aircraft will be used to build potentially 10 new bases in Europe.
  • Unit operating costs, excluding fuel, are expected to continue falling over the next five years.

Sources:

  • "BOEING has agreed to sell 70 aircraft to Ryanair, the Irish airline, for $4.6 billion (Pounds 2.5 billion) -a discount of more than half the list price of the jets." - The Times, 2005
  • "The 737-800, the latest version of its short-haul carrier, was priced at $65 million, but industry sources indicated that Ryanair had probably agreed to pay between $25 million and $30 million for each plane." - The Times, 2005
  • "Boeing said that delivery was sold out for this year; 78 per cent of the slots for 2006 are sold. You can imagine the vast majority of the slots for 2008-2012 have not been sold." - The Times, 2005

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