Ryanair Hopes to Fly Boeing 737 MAX Next February or March

Zacks Equity Research

Per Reuters, Ryanair Holdings plc RYAAY is expected to start flying the Boeing 737 MAX aircraft next February or early March.
The company’s CEO Michael O'Leary stated, "If it flies in North America this side of Christmas, I think we are pretty secure we will be back flying some time (around) end-February/March". Meanwhile, he believes, "The best outlook is the first aircraft would come in January. The more realistic outcome: the end of February/March".

Before the aircraft is certified fit to fly, the Federal Aviation Administration (FAA) is required to give its nod on the proposed software and training changes by Boeing. Following FAA’s review, the aircraft needs to be approved by the European Union Aviation Safety Agency (EASA). Meanwhile, Ryanair’s MAX200 plane needs to be approved separately.

Ryanair Holdings PLC Price


Ryanair Holdings PLC Price

Ryanair Holdings PLC price | Ryanair Holdings PLC Quote


Ryanair, being one of Boeing’s biggest 737 MAX customers with 135 firm aircraft orders and 75 options, has been struggling quite a lot due to delivery delays from the aircraft’s grounding. During fiscal 2020, non-fuel unit costs are projected to inch up 2% due to this headwind among other factors. Moreover, with the ongoing grounding issue, the carrier will be flying 30 MAX planes compared with 60 it hoped for previously.  As a result, the airline trimmed its fiscal 2020 growth forecast to 3% from 7% expected earlier.

Thanks to the prolonged grounding period, U.S. airlines including the likes of United Airlines UAL and American Airlines AAL have suspended the MAX aircraft from their schedules through December. Whereas Southwest Airlines LUV has removed the aircraft from its schedule though early January.

Ryanair to Lay Off Nearly 700 Pilots

Due to an excess of 500 pilots, O'Leary announced plans to cut back 700 positions. Meanwhile, the British Airline Pilots Association (BALPA) accused the company’s management of threatening pilots "with the removal of staff travel benefits and inflated and draconian deductions from salary" in case they participate in strikes.

However, O'Leary denied such allegations saying "it is illegal to blacklist someone for being involved" in trade unions. He further added that "it has never happened, but we have been accused of it for around 30 years now."

Amid the controversies, O'Leary received some encouraging news as Ryanair shareholders approved a bonus scheme that could fetch him 100 million euros in five years in case he is able to either double the company’s profitability or its share price within the time frame.
It remains to be seen whether O'Leary succeeds in receiving this massive bonus amount given that the company struggles with both the Boeing MAX groundings and persistent labor strife, which have significantly hampered the company’s operations.

Zacks Rank

Ryanair carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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