Ryanair Holdings Plc (RYA), Europe’s biggest discount airline, said it’s exploring a requirement for at least 200 single-aisle jets with Commercial Aircraft Corp. of China after signing an accord to help develop the C919 model.
Ryanair is interested in a variant of the plane that would carry about 200 people and be available from 2018. The Irish company, which will have 300 Boeing Co. (BA) 737s by 2013, could move to a mixed fleet if the economies offered by a new entrant can at least match those of the current fleet and the price is right, Chief Executive Officer Michael O’Leary said in an interview.
Comac plans test flights for the C919 in 2014, with service entry by 2016. The jet, which seats about 150 people, aims to pry open the Airbus-Boeing duopoly in a single-aisle market that’s the largest part of the civil aviation industry. Ryanair said it’s also in discussions with the U.S. company about its need to replace older planes and that the accord with Comac, as the Chinese company is known, won’t threaten that relationship.
“The preference ultimately for Ryanair would be to have the same fleet of 737s, so this is perhaps more of a warning shot at Boeing in relation to pricing,” said Eamonn Hughes, an analyst at Goodbody Stockbrokers in Dublin. “The industry is still in fairly bullish mode from the manufacturer perspective, so it doesn’t look like Boeing will be in any rush to do a deal.”
Ryanair could also take out 200 options for narrow-body jets, O’Leary said at a press conference in Paris. Boeing said it would be “inappropriate” to comment on the Dublin-based carrier’s intentions, though it is a “greatly valued” customer.
“We have a deep knowledge and understanding of Ryanair’s operations and fleet requirements based on many years of close, successful partnership,” Michael Tull, a spokesman for Chicago- based Boeing, said in an e-mailed response to questions.
By teaming up with Ryanair to develop the C919, Comac has indicated that it’s “quite serious” about penetrating the single-aisle market, according to Goodbody’s Hughes, who has a “buy” recommendation on the Irish carrier’s stock.
“You would have to see a few orders for the C919 before people are convinced that they are going to be there for the long term,” he added.
‘Very Large Order’
O’Leary said that he’ll place “a very large order” if Comac meet’s Ryanair’s demands. The C919 will be as much as 15 percent more fuel-efficient than existing models, the Chinese company’s sales and marketing manager, Chen Jin, said in March.
“We’ve no interest in trying to muscle Boeing, because we can’t,” he said. “But clearly with the development of the C919 there’s a credible low-cost alternative to the 737 and the Airbus A320.”
Because Ryanair needs one cabin-crew member per 50 people, expanding its aircraft to 199 seats from the current 189 would avoid the need for additional staff and hit a “sweet-spot” for per-passenger costs, he said. The carrier wants Boeing to tailor a future 737 variant for the same number of seats, he added.
Ryanair said in 2009 it had pulled out of a deal to buy 200 additional 737s after failing to agree unspecified terms with Boeing, despite having settled on a price for the aircraft.
Airbus SAS, based in Toulouse in southern France, has been offering carriers a version of its A320 single-aisle plane with new engines, slated for service at the end of 2015. The company has picked up more than 500 firm orders or commitments for the aircraft since announcing the plan at the end of 2010.
Boeing has yet to decide whether to follow its European rival down the re-engining path or build an all-new aircraft.
Comac’s chief designer, Wu Guanghui, said yesterday that the C919, China’s first passenger jet, may attract 50 to 100 more orders in 2011, revising guidance for that number of contracts in total for the full year issued in March.
While there have been are some glitches, the program is “on schedule,” Wu said following the formal signing of an agreement with engine supplier CFM International, a joint venture of General Electric Co. (GE) and Safran SA (SAF) of France.
As of March 31, Ryanair had 272 Boeing 737-800s in its fleet, with firm orders for an additional 40. That makes the Irish carrier the model’s No. 2 operator after Southwest Airlines Co., which has 553, according to research firm Ascend.
British Airways signed a memorandum of understanding with Comac at the Farnborough Air Show in Britain last July, agreeing to initiate talks about “future aircraft needs.”