Ryanair on Tuesday warned it would cut flights and growth forecasts due to the grounding of Boeing’s 737 Max jet in the wake of two crashes that killed 346 people.
The blow to passengers and shareholders comes at an already tough time for Ryanair, which is being buffeted by the risk of Brexit and intense competition among low-cost airlines.
It said delays to deliveries of the 737 Max mean it must scale back flights and cut bases, with jobs clearly at risk.
All the planes were grounded by aviation authorities after the crashes which saw 189 killed on an Indonesian Lion Air flight last October and 157 die on an Ethiopian Airlines flight in March.
Ryanair said it “remains committed” to the jets and is confident they will be back in the air this year but admits “the exact date of this return remains uncertain”. It expects to take delivery of 30 of the planes by May 2020, fewer than the 58 originally planned.
That will cut Ryanair’s 2020 summer growth rate from 7% to 3%. Traffic for the year to March 2021 will be 157 million passengers, down from an expected 162 million.
Chief executive Michael O’Leary said: “This shortfall in aircraft deliveries will necessitate some base cuts and closures for summer 2020 but also for the winter 2019 schedule.
“We are starting a series of discussions with our airports to determine which of Ryanair’s underperforming or loss-making bases should suffer these short-term cuts and/or closures.”
The planes are integral to Ryanair’s growth plans since they carry more passengers but burn less fuel. O’Leary has described the Max as “the game-changer” for the business.
Ryanair has 135 of the Boeing models on order. Boeing is trying to persuade regulators that software alterations are enough to make the jets safe.
There is speculation in the industry that the Max will be rebranded, though Boeing has yet to comment.
Boeing hopes regulators will allow the 737 to fly again from September. O’Leary said “it would be prudent to plan for that date to slip by some months, possibly as late as December”.
Airline shares rose as traders bet that delays to the new jets will remove capacity from the market, perhaps increasing air fares and profit margins.
British Airways-owner IAG, Air France and easyJet were up by more than 2%.
Ryanair shares were steady at €10.18, down from €18 two years ago.
