Ryanair Plans a Major Aircraft Order

While most carriers are scaling back because of slowed consumer spending and higher fuel costs, Ryanair is talking to Boeing and Airbus about adding to its fleet

Ryanair is in talks with Boeing and Airbus about delivery of up to 400 new aircraft from 2012, despite looming losses this year if fuel costs remain at current levels.

The carrier launched a major price cuts programme yesterday, with a loss-leading pledge to offer one million seats at £5 next month, half the Government's £10 air duty charge. The scheme aims to shore up weakening demand at a time when Ryanair is warning of potential losses up to €60m (£47.3m), compared with €439m profits last year, if trading conditions do not improve.

At the launch, Michael O'Leary, the Ryanair chief executive, also confirmed that negotiations are under way for an order of 200 planes, with an option for 200 more. "We've been trying to talk to Boeing about orders beyond 2012 but their prices are too high," he said. "We've started talking with Airbus about the possibility of taking Airbus aircraft."

The size of the potential order in relation to Ryanair's existing fleet of 166 Boeing aircraft indicates considerable confidence that the 10 per cent share of the European market the company shares with easyJet has major growth potential.

Starting negotiations now is also a response to the worsening condition of the aviation sector, squeezed by slowing consumer spending, rocketing fuel prices and the environmental backlash against air travel. In the aftermath of the terrorist attacks in the US in Sep-tember 2001, Mr O'Leary struck a bargain with aircraft manufacturers facing a dearth of orders, and he has talked publicly for some months of how to make the most of the current downturn.

But the Official Airline Guide yesterday predicted a global drop in capacity of 7per cent, or nearly 60 million seats, in the fourth quarter of the year.

With most carriers scaling back, Mr O'Leary's confidence may be bravado, one City source said. "These are challenging and ambitious growth plans," the analyst said. "It might work at the moment because growth rates are still high for low-cost travel but whether that growth will still be out there in 2012 is not clear."

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