Ryanair signs 10-year maintenance deal with GE

Ryanair has signed a 10-year maintenance deal with a subsidiary of US engineering giant General Electric. The value of the contract was not disclosed, though Ryanair said it would "significantly reduce our maintenance and overhaul costs".

The low-fares airline and GE Engine Services have built a 10-year extension option into the deal. The contract will include the maintenance and routine overhaul of the CFM56-7 engines which power the airline's fleet of 59 Boeing 737-800 engines.

GE will also take on the work involved in the 96 aircraft Ryanair has confirmed orders on between now and 2010 and the 123 aircraft on which it has options in that time, if exercised.

GE will also repair and maintain engine components, provide spare parts and technical support. Analysts in Dublin welcomed the news, saying it was further evidence of Ryanair's determination to examine its entire cost structure and aggressively reduce overheads.

Maintenance and repair costs of €43.5 million accounted for about 5 per cent of overheads in the year to the end of March last.

"In terms of the costs that the airline controls, however, maintenance, repair and overhaul comes about second behind staff costs," said Goodbody analyst Mr Joe Gill. "Those costs will double over the next few years as the airlines increases its fleet."

He said structural oversupply in the maintenance, repair and overhaul market meant that Ryanair was in a position to secure favourable terms in the negotiations. "While we do not have the figures, we think it will have a material effect on costs," he said.

Mr Michael Hickey, Ryanair director of engineering, welcomed the exclusive agreement and said: "GE are a world class provider of these services and we have secured a long-term agreement which will enable us to significantly reduce our maintenance and overhaul costs."