Ryanair braced for delivery delays as problems mount at Boeing - O'Leary

16th Oct 2024 12:09

(Sharecast News) - Ryanair could be forced to trim its 2025 traffic outlook, it was reported on Wednesday, on the back of mounting problems at key supplier Boeing.

In an interview with Reuters, chief executive Michael O'Leary said he did not expect Ryanair's orders with Boeing to be fulfilled as currently scheduled.

He said: "We were supposed to get 20 deliveries before the end of December. They'll probably come now in January and February, and that's fine. We'll have them in time for next summer.

"The big issue for Ryanair is we're due 30 aircraft in March, April, May and June of next year, and how many of those will we get?

"I think we're clearly going to walk back our traffic growth for next year, because I don't think we're going to get all those 30 aircraft."

Boeing has been rocked by labour unrest as well as heightened regulator attention after a door panel blew off a 737 Max aircraft mid-flight in January.

Strike action by its largest union got underway last month, halting production in Washington state of various models, including the best-selling 737 Max. Boeing wants to axe around 17,000 workers.

Earlier this week, it announced plans to raise $25bn in new capital as well as agreeing a new $10bn credit facility, as it seeks to shore up its balance sheet in light of the ongoing strike.

S&P Global Ratings, which last week said Boeing's bonds faced being potentially downgraded to junk status, said the fund raising had bought the company some time.

But it warned: "The company has to resolve the strike and really be on a path to building planes again in order to maintain the rating."

In addition, in common with rival manufacturers such as Airbus, Boeing has also been hit by supply chain challenges.

O'Leary told Reuters that capacity constraints had never been worse.

He continued: "We want to avoid next year what we had this year. We had geared up, we crewed up the 50 aircraft and then we only got 30.

"We were overcrowded, over-staffed. We took a significant cost penalty this year."