Ryanair boss Michael O’Leary blames Boeing and Airbus delays for ticket fare rises
Ryanair chief executive Michael O’Leary has blamed delivery delays at Boeing and Airbus for hiking air fares across Europe.
O’Leary told analysts on a conference call that capacity constraints caused by supply chain issues at the planemakers would “underpin strong pricing.”
“Even if consumer demand is challenged, there will be less capacity than there was pre-covid and I think the price of that capacity will be higher.”
“We’ve certainly seen that amongst the legacy airlines in Europe,” he explained, with Air France-KLM and the IAG “materally increasing air fares” in recent years.
The comments from Ryanair’s outgoing chief came after the budget carrier delivered record half-year profits and announced its first ever dividend.
The bumper performance was driven by rising ticket fees. Ryanair’s typically dirt cheap air fares jumped just shy of a quarter in the six months to October, as it shipped more than 105.4m passengers.
European air fares rose between 20 to 30 per cent this summer, compared with its pre-pandemic equivalent, according to data from the European Union released following a parliamentary question.
Supply chain snarl-ups and delays have plagued engine makers and the aerospace titans Boeing and Airbus throughout this year.
Both major planemakers have struggled to meet resurgent post-Covid demand for travel, leading to monthlong waits for its airline and lessor customers.
Ryanair’s rival Wizz Air has been forced into slashing its capacity by 10 per cent as a result of a production snag at its engine provider Pratt and Whitney.
Boeing in particular has drawn criticism for repeat issues with its iconic 737 Max, with a recent defect hitting three quarters of its fleet and delaying future deliveries.
Ryanair has jostled with the planemaker over long delivery times in the past, but tensions have cooled since it placed a collosal £31.7bn order for 300 Boeing 737 Max 10 jets in May.
O’Leary said he expects “material groundings of competitors capacity through the summer of 2024 and we think that would run into 2025… So we see very little prospect of Europe returning to its pre-Covid capacity between 2024 and 2024.”
“Both Airbus and Boeing are running materially behind because of supply chain challenges. Boeing also with their production issues with Spirit and I also think the Pratt and Whitney engine issue is a large and as yet not well factored into capacity story for summer 2024.”
The global airlines body Iata forecast in June that international air fares would keep climbing over the next 10-15 years, with the cost of transitioning to greener, more expensive fuels a long-term key factor.