Boeing repaid Ryanair €250 million due to new aircraft delays
Delivery of 30 Boeing Max 737 aeroplanes to Irish airline delayed by two years
Ryanair is expecting to take delivery of 30 Boeing Max 737 aircraft in 2021. Photograph: Adrian Dennis/AFP via Getty Images
The news emerged as Ryanair Holdings reported that a collapse in air travel and once-off charges left it with a €410.5 million loss in the six months ended September 30th, the first half of its financial year.
The Irish airline expects the first 30 of the Boeing Max 737s that it has ordered from the US giant to arrive in early 2021, around two years after they were originally scheduled for delivery.
Ryanair’s first-half results state that it received €250 million in supplier reimbursements in the second quarter of its financial year, the period between the end of the June and end of September.
The accounts subsequently say that Boeing paid the airline group supplier reimbursements in the second quarter, but add “compensation discussions will not be finalised or concluded with Boeing until the Max returns to service and revised delivery schedules can be finalised and agreed”.
This delayed delivery of the aircraft to airlines including Ryanair while safety authorities and Boeing worked to ensure that the model was airworthy.
Regulators are now thought likely to approve the aircraft around the end of this year, paving the way for Ryanair to receive the first of its aeroplanes early in 2021. The airline has ordered 135 of the 737 Max, with an option to take a further 75.
Neil Sorahan, the group’s chief financial officer, did not rule out the possibility that it could cash in on low demand for new planes by ordering more new aircraft. “We have always been clear that if aircraft are priced at the right level, then we are interested,” he said.
Ryanair’s accounts show that its business lost €197 million after tax in the first half of its financial year, but a €240 million charge for unused fuel hedging and foreign exchange translation, contributed to an overall loss for the period of €410.5 million.
Ryanair Holdings earned a €1.15 billion profit during the same six months last year.
The group had €4.5 billion in cash at the end of September, aided by a €400 million share placing and an €850 million bond issue, both completed earlier that month.
Covid-19 grounded 99 per cent of its fleet from mid-March to the end of June as Europe’s governments banned air travel to contain the virus.
Ryanair earned most of its first-half revenues from the beginning of July, when it restarted flying, but operated at around 60 per cent of the previous year’s capacity.
The company recently said that it expected to carry 38 million passengers during this financial year.
The airline warned on Monday that it could cut this prediction again if EU governments continued to “mismanage air travel and impose more unco-ordinated travel restrictions or lock downs”.
In light of the current uncertainty, Ryanair Holdings did not give guidance for its full-year results.
Mr Sorahan said the group faced a challenging few months but added that it should emerge from the other side of the crisis.
“We will be in a very strong position, we will have the right cost base and the right cash position,” he added.
In a statement, Ryanair predicted that following the crisis, its balance sheet would allow it to fund lower fares and add new craft to cash in on opportunities where rivals had cut capacity or failed.
Ryanair’s shares closed 4.65 per cent up at €12.375 on Monday. Dealers said losses were lower than expected.