Ryanair contemplates order for 300 aircraft

[sn26567]

Ryanair is contemplating an order of up to 300 aircraft from either Boeing or Airbus, CEO Michael O’Leary told the Financial Times. The LCC late last year walked away from the negotiating table with Boeing after it was unable to agree on a follow-up order for 200 737s for delivery in 2013-16.

Ryanair had informed both manufacturers in early summer about the possible order if suitable prices and terms were offered, though there were no negotiations at present. According to Dow Jones, Airbus has refused to engage in talks with Ryanair concerning the order.

O'Leary also confirmed earlier statements to Bloomberg Businessweek that he is seeking permission from aviation authorities to use only one pilot on the shortest flights.

Source: ATW online. Full article

[tsv]

Ryanair had informed both manufacturers in early summer about the possible order if suitable prices and terms were offered, though there were no negotiations at present. According to Dow Jones, Airbus has refused to engage in talks with Ryanair concerning the order.

I'm sure there's a bit of bad blood between Ryanair and Airbus but I can't believe Airbus would "refuse to engage in talks". Stupidity on behalf of both parties. Boeing can charge whatever they like if Airbus and Ryanair don't even bother to talk to each other so not real smart by Ryanair. And no manufacturer can afford to ignore an airline that wants to buy 300 planes!

If Ryanair can get funding for this order (which I doubt but what would I know) they will have to talk to Airbus and probably the Chinese and Russians as well. Too much money at stake to carry on like a pack of spoilt School Boys.

[Stij]

Too much money at stake to carry on like a pack of spoilt School Boys.

Are you sure? You know what's written on Virgin Atlantic's 340-600? "Mine's bigger than yours!". The bigger the money becomes, the more childish the play gets! Look at our Belgian politicians!

Cheers,

Stij, unfortunatly not acting childish!

[regi]

I just wonder if the Chinese production site of the A320 is mature enough to expand in such a way that they would be able to help Airbus to sell special adopted A320's to Ryanair.
In the same way, I think ( means: I don't know ) that Boeing would have liked a similar production facility in China, certainly when they took over MD, which had manufacturing of the MD-80 in China.

Other issue: the Euro and Airbus. EADS has stated before that eventually they would have to manufacture airplanes outside the eurozone because airplanes are sold in dollars. Well, that statement was before the fall of the euro. But anyway.

300 airplanes is a lot. Airbus could start production in the USA in the plant where they are planning to build the A330 tanker to convince the USA of their commitment.

I don't believe that Ryanair is automatically a Boeing adept. Airasia also switched sides. It's all about the money.

[Propwash]

Think as MOL, think cheap, think Irkut MS-21

[tolipanebas]

MOL shot himself in the food by commenting in his typical arrogant style on his 737NG purchase a few years ago, saying he "simply raped Boeing". That headline went around the world and Boeing's shareholders were pissed off by it, so much even management had to vow never to sign such large deals at such low prices again....

In fact, these massive orders aren't nearely as lucrative for the manufacturer as one might think, since they take up too much production capacity at once and since the customer expects a heavy discount, the unit price and thus also profit of each individual plane is in fact lower than what can be expected from smaller deals. On top of that, it risks saturating the market, when the customer disposes of his planes again, so the lesson from it is that IF you can fill your production line the normal way, better let MOL shop elsewhere really...

Last year, MOL tried to repeat his trick, not surprisingly right in the middle of one of the worst economic crises the aviation industry had seen, hoping manufacturers would be willing to eat their words and sign a deal with him anyway just to fill their order book and keep their lines running, but much to his surprise and dispair, they didn't and he thus walked away from a deal, saying they would soon come back for him as the crisis worsened...

They didn't however, yet the thing is he needs those planes though, so it is MOL who has to come back to the table, while in the mean time, the economic situation has much improved and manufacturers have massively increased their backlog. Both Airbus and Boeing are even increasing the monthly output numbers of the A320, resp 737 lines just to keep the waiting time somewhat steady, so chances for MOL to get a better deal than last year are below ZERO, and he already found that one too much....

I think Boeing will make MOL pay for his big mouth this time, and much to his horror, Airbus isn't willing to act as a cheap way out. Seems like this time, he'll just have to PAY UP, or SHUT UP, and there's nothing he can do about it.

[regi]

anything can happen. OK, MOL is a bookkeeper.
But he has to obey shareholders.
Imagine: Ryanair simply buys a aircraft manufacturer.
vertical integration, Ford style

[tolipanebas]

vertical integration

Vertical integration???? At Ryanair???

ROTFL

The core of their business model in essence is to 'rip off suppliers', ranging from plane suppliers (manufacturers), over RWY and terminal suplliers (airports), to ground man power suppliers (handlers) and even energy suppliers (fuel companies).

Everybody has to go low, often even below real cost price to get FR as a customer...

For that reason, FR must be kept as a slim as possible, while having as much desperate suppliers as possible; if they were to own their suppliers, they can not make them go below costprice, otherwise the loss would be theirs, woudn't it?

[regi]

vertical integration

Vertical integration???? At Ryanair???

ROTFL

The core of their business model in essence is to 'rip off suppliers', ranging from plane suppliers (manufacturers), over RWY and terminal suplliers (airports), to ground man power suppliers (handlers) and even energy suppliers (fuel companies).

Everybody has to go low, often even below real cost price to get FR as a customer...

For that reason, FR must be kept as a slim as possible, while having as much desperate suppliers as possible; if they were to own their suppliers, they can not make them go below costprice, otherwise the loss would be theirs, woudn't it?

100% correct. And one of the backbones of their succes. But...this works as long untill you have reached the bottom of the pit and see that you have to change your businesss plan to stay ahead of competition.
Maybe they are there now already, when their key suppliers are reluctant to work any further with them. Not only the airplane manufacturers, but also several airports which do not want to follow the one sided approach.
It are not stupid people at Ryanair - that consists out of more clever people than MoL alone.
To take over a airplane manufacturer is maybe a bit over the top, I agree. But with financial reserves, Ryanair could be able to take over ...an airport.

[tolipanebas]

More and more suppliers (in the widest sense of the word) have come to understand they are limited in their production capacity and have in fact no problem whatsoever filling their capacity at normal rates, so why would they still bother going down for FR and MOL's sake any longer?

Ryanair's arrogant business model has reached about its limits: they are having to start ever longer routes because they have a hard time finding sufficient new airports in western Europe that want to pay for their presence and they are increasingly having to fight to get contracts renewed at the places they operate from right now... As one says in English: you can fool some people some times, but you can't fool all people all the time. They've plucked all of the low hanging fruit and they need to climb up the ladder ever higher to keep plucking, at some stage however, you end up at the last step....

Maybe it would be a good time for MOL to step down and make room for another CEO, somebody who has a less outspoken arrogant profile, because quite frankly his presence is beginning to hinder things rather than facilitiating them, e.g. FR's previously failed bid to buy more narrow body jets. And yes, the next CEO will has to accept a cost rise pretty much all round the scala: it will be the price FR has to pay to keep growing.

[airazurxtror]

The core of their business model in essence is to 'rip off suppliers', ranging from plane suppliers (manufacturers), over RWY and terminal suplliers (airports), to ground man power suppliers (handlers) and even energy suppliers (fuel companies).

Ryanair may well "rip off suppliers", but they offer fantastic bargains to the travellers. and that is the main thing, for the public at large (and for me).
Just made wednesday a CRL-NYO-CRL for which I paid 16 euros all included; soon a few CRL-DUB-CRL for 10 euros each; I don't care who they rip off, as long as I can enjoy such deals.

[regi]

More and more suppliers (in the widest sense of the word) have come to understand they are limited in their production capacity and have in fact no problem whatsoever filling their capacity at normal rates, so why would they still bother going down for FR and MOL's sake any longer?

Ryanair's arrogant business model has reached about its limits: they are having to start ever longer routes because they have a hard time finding sufficient new airports in western Europe that want to pay for their presence and they are increasingly having to fight to get contracts renewed at the places they operate from right now... As one says in English: you can fool some people some times, but you can't fool all people all the time. They've plucked all of the low hanging fruit and they need to climb up the ladder ever higher to keep plucking, at some stage however, you end up at the last step....

Maybe it would be a good time for MOL to step down and make room for another CEO, somebody who has a less outspoken arrogant profile, because quite frankly his presence is beginning to hinder things rather than facilitiating them, e.g. FR's previously failed bid to buy more narrow body jets. And yes, the next CEO will has to accept a cost rise pretty much all round the scala: it will be the price FR has to pay to keep growing.

I do supply some customers who have the same attitude and the reality is that they have to bow down in the long run, or they have no more suppliers. And they have such a bad reputation that when they contact far away suppliers, they get the answer: get lost with your stories. Take the top 5 industrial manufacturing companies in Belgium and of each of them I can tell you recent similar stories. The crisis has strenghened the suppliers that they don't have to be dependant of 1 big customer. Most of the manufacturers survived and they don't see a reason to give away capacity at bargain prices.

[regi]

More and more suppliers (in the widest sense of the word) have come to understand they are limited in their production capacity and have in fact no problem whatsoever filling their capacity at normal rates, so why would they still bother going down for FR and MOL's sake any longer?

Ryanair's arrogant business model has reached about its limits: they are having to start ever longer routes because they have a hard time finding sufficient new airports in western Europe that want to pay for their presence and they are increasingly having to fight to get contracts renewed at the places they operate from right now... As one says in English: you can fool some people some times, but you can't fool all people all the time. They've plucked all of the low hanging fruit and they need to climb up the ladder ever higher to keep plucking, at some stage however, you end up at the last step....

Maybe it would be a good time for MOL to step down and make room for another CEO, somebody who has a less outspoken arrogant profile, because quite frankly his presence is beginning to hinder things rather than facilitiating them, e.g. FR's previously failed bid to buy more narrow body jets. And yes, the next CEO will has to accept a cost rise pretty much all round the scala: it will be the price FR has to pay to keep growing.

well, just now with that Shannon outburst , combined with my remark that Ryanair could change its business model because they are at the end of the line. But I have no idea if the operations of Shannon airport are for sale.

[LJ]

Ryanair may well "rip off suppliers", but they offer fantastic bargains to the travellers. and that is the main thing, for the public at large (and for me).
Just made wednesday a CRL-NYO-CRL for which I paid 16 euros all included; soon a few CRL-DUB-CRL for 10 euros each; I don't care who they rip off, as long as I can enjoy such deals.

Enjoy while you can. Even MOL acknowledges that the race to the bottom is not sustainable in future. In a recent interview he hinted towards changing the FR business model to a more service airline (and thus higher fares).

http://www.guardian.co.uk/business/2010 ... -low-fares

[cathay belgium]

Hi LJ,

Nice to mention MoL interview but I guess FR business model will always be on low-fares.
Don't know why they would change, FR is making money, they grew of the airline will be stopped shortly but
just because there aren't more people on this planet that will/can fly.
If they will raise fares, which reason would these people have to choose for FR?
If I can choose the same fare FR or SN , guess what ??
If fares raises airazur will stop flying and me also and a lot of others which travel more or for fun will stop
flying,so their self-invented group of clients will dissappear,..paxnumbers will drop dramatically and
planes/fuel/wagescost stays the same .. guess what will happen..
No FR is a nice product but their strength is their biggest problem..
In a few years planes must renewed which costs also a lot of money ..

LCC will stay LC or they will dissappear in the same speed as they raised.
And then I will forget even the taxes wich politicians will obey them,CO2 taxes,green taxes,..
They will come ,not now..but in 10 years aviation will switch ..

The only grewth FR will have/can create will be longhaul.. to USA !

So 200 737-800 and 100 787-800 ?

Even, nor Airbus and Boeing can don't look at 300 aircraft !
I will laugh when EMB or Sukhoi or even Bombardier will got the order..
Then in the following years there will be 300 aircraft flying extra over the world and change the whole
industry , because FR will change these 300 also in a more speeding way than other airliners do..

CX-B

[cnc]

If I can choose the same fare FR or SN , guess what ??

guess which airline most people know best?

LCC will stay LC or they will dissappear in the same speed as they raised.

once the airline made its name generally well known with the public they have a good chance to succeed in switching to a more or less full service model

The only grewth FR will have/can create will be longhaul.. to USA !

LCC longhaul works in some parts of the world but transatlantic is suicide if you ask me.
besides watch EK. with that new mega order for A380's they might become the most dominant airline in the world for cheap longhaul flights

[cathay belgium]

Hi,

guess which airline most people know best?

Maybe, but if the fares are equal ?
Who has the best frequencies, flying to the main airports ?
Don't forget if LCC will become equal SN will reinvent media and commercials ..
Whithout the lower fares, FR can't fight because they loose the main part of their travellers,
students,enthousiasts, normal people who take the advantage of a cheap flight, if these fares
are lost so are the travellers.
And then .. the B737-800's must be filled to get out of costs but if they fly only 60 percent full like
normal carriers.. think they better watch out for CS-series or EMB like .. SN ?
And if low cost will disappear , there's a gap which have already proven it can remain.. LCC ?!
IMHO .. LCC are here to stay with low fares, not so low as now but still.. ( under 100 euro?! )

once the airline made its name generally well known with the public they have a good chance to succeed in switching to a more or less full service model

For the same reason .. NOT ANY CHANCE ! same reasons
If they will.. what's all the trouble with the full service model nowadays.. BA,IB,AZ,AF..
oh yeah wasn't AF starting LCC AF Express ??
Think I've proven my point ..

LCC longhaul works in some parts of the world but transatlantic is suicide if you ask me.
besides watch EK. with that new mega order for A380's they might become the most dominant airline in the world for cheap longhaul flights

For the same reasons as LCC exist now ot could work transatlantic ..
only the start-up phase it's a hard step to take ..
Think once LCC FR could gain money to fly NY south,north , whatever..
They'll come with a great clientele which never had a chance to fly USA,
but the fares must be also lower than now .. ( 250 euro ? )
EK isn't really LC, do you think ?
They even don't have a LCC mentality and the fares may be not high but low ??

Think better watch Airasia.. but with only STN to KUL ?
If you won't to start real LCC longhaul USA is the only option IMHO,
Asia is already served ( less ) but the need isn't there, maybe AFI but operations and
regulations are not optimistic , said in the most positive way

Let's wait and see ..

CX-B

My guess : B737-800 , again !

Note : Southwest still didn't change politics since the begging aren't they ..

[Bralo20]

EK isn't really LC, do you think ?

EK isn't exactly a LCC but they they think they are flying cattle arround in their B777's with 10 across, just like AF and KL in their high density 777's... A pitty since their prices aren't exactly cheap...

Maybe FR can order 777's with 11 across?

[cnc]

Think I've proven my point ..

no you don't.

For the same reasons as LCC exist now ot could work transatlantic ..
only the start-up phase it's a hard step to take ..
Think once LCC FR could gain money to fly NY south,north , whatever..
They'll come with a great clientele which never had a chance to fly USA,
but the fares must be also lower than now .. ( 250 euro ? )

you have no clue about the operational part of long haul flights.
try to make a list of all different things between a FR short and long haul rotation going from pushback to crew to secondary airports and their facilities

EK isn't really LC, do you think ?
They even don't have a LCC mentality and the fares may be not high but low ??

actually i do consider EK's economy class more or less LC in terms of long haul if you check what they have in mind for the future

Note : Southwest still didn't change politics since the begging aren't they ..

do you know where WN gets most of its profits from? cargo

[cathay belgium]

Hi,

no you don't.

What did you missed or what's wrong with mine arguments ?

Oh yes, I did !

do you know where WN gets most of its profits from? cargo

Okay, I must admit I didn't know this .. ( if you're right,didn't check it ).
But I guess this isn't really the case for FR or EZY , nor will in the future.
( Can't say I count TNT as a LCC )

CX-B