Michael O’Leary and Ryanair are inseparable as personas.
They are one and the same. (Tony Ryan Who? – with apologies to the late good Doctor).
Never a person to mince a word or add nicety when an insult or an in your face comment would achieve the same. He is the complete antithesis of the Honey vs Vinegar approach. But FR faces some severe challenges on the horizon. There are few aircraft on order past 2012. So this is a pivotal year for the airline to determine its future. This analysis is based on the itnerviews given, the market current, the data available and – well like most analyses – a strong sense of a hunch.
Next Gen Boeing 737.
On the 737, McNerney has previously (in 2010) said Boeing executives will decide this year (2010) between re-engining and a new airplane. So far in 2011 we are hearing the same noise. Airbus' decision regarding its A320 won't bear much on that, he said.
"The No. 1 thing I want to know is: During what time frame we can get an all-new airplane done that our customers will pay for?" he said. "If that answer is 2025, then the case for re-engining strengthens. If the answer is 2020, no matter what Airbus does I think customers will wait for us." (Re-engined single-aisle airliners would be expected around 2016.)
One factor is that the 737 now accounts for a huge part of Boeing's order backlog, McNerney acknowledged. "I'd rather not put the backlog at risk twice unless we have to."
Responding to a moderator's comment that airlines are looking for direct operating cost savings or 15 or even 20 percent from a new jet, McNerney said: "I think that level or a little above is sort of the test that we're looking at for what the new airplane has to be so that it would be good enough, so there would be enough economics in it for us to share it with our customers." The development cost for a new airliner could exceed that of re-engining by by "a factor of four or five," he said
And what about this new design. Flight global opined that it could be the short stubby flying egg. http://www.flightglobal.com/blogs/flightblogger/2010/09/boeing-patent-may-provide-glim.html Others have speculated on a number of things but Boeing is stuck because the 737 core design cannot accommodate the new GTF type engines that are on offer for re-engining. The 17 inch clearance requirement makes anything other than a radical new undercarriage design (with its attendant costs of design and efficiency penalties) almost impossible. As an added distraction if you pay attention as a Boeing watcher – they acquired Summit in Montana. Summit has as one of its key knowledge in the creation of folding systems.
As we have seen from the NEO A320 the cost truly is a development package of about 20% of the cost of a brand new aircraft in BOEING and AIRBUS terms not necessarily in terms of what Bombardier, The Chinese and Japanese are going to spend on similar sized aircraft. Remember too that Boeing has a problem with the 787 in that the cost of the smaller aircraft in terms of capital to direct operating costs is making the 787-9 much more popular than its smaller sibling(s) with the 783 unlikely ever to see the light of day. The Achilles heel of the 787 is not actually at the top of the range its at the bottom. The benefit of the Airbus family is that while the A321 has not been a great seller its size has enabled efficiencies for those airline customers. IE just 2 aircraft types A330/A340/350 and A319-A321 size really does pay off in efficiency.
The Boeing Y1 and 737RS studies were based on certain assumptions about the GTF style of engine. This short term growth and being a new engine design the potential for longer term higher efficiencies and performance were enough to convince Airbus to proceed – after a lot of prodding from customers – with the A320 NEO derivative. As much an enhancement to the product line as the 737NG family was to the venerable 737 design.
So where does Michael O’Leary fit into this equation? Simply – his 300 plane order. Not to snub our noses at Delta’s reported 100-200 plane order or indeed Indigos 180 plane order – but 300 does kinda dwarf that.
Airbus now has a plane it can deliver in his timeframe and Boeing does not. Airbus can also demonstrate (courtesy of Air Berlin and Easyjet) comparable operating cost models for a single aircraft fleet vs a dual fleet. Further Airbus is in a catbird position because there is a quirk in Ryanair that would favour a fast transition out of the Boeing fleet into an All Airbus one. Ryanair disposes of a large quantity of its aircraft at the end of each year in sale or leases out to operators hungry for next gen aircraft at a reasonable price.
Ryanair does not give 2 hoots for the new Sky Interior. I am sure a few choice words were exhibited by MOL when the Boeing Salesman offered it to him.
Boeing Salesman (BS) to Michael O’Leary (MOL)
BS: Michael – have you seen our fabulous new Sky Interiors on the 737s?
MOL: Fuck off
BS: they are even fuel savings associated with this new design
MOL: Prove the ROI in 12 months
BS: Well the value is in customer service and improved passenger comfort
MOL: Tell that to Mrs O’Shaunessy when I tell her the ticket price went up 2 euros?
BS (Desperately): When the passengers are standing in the aisle waiting to pay their 1 euro for a trip to the lav – they wont be so unhappy…
MOL: Sonny – how much are you going to pay me to take this awful poncy lighting?
BS: Let me call you back….
Bottom line – Ryanair could change the market for new aircraft. An opportunity that has not escaped either the Chinese (C919), Bombardier (Cxx) and of course the two traditional players.
They had better get the pencils really sharp. Latest word is that Airbus and FR have gone cool. But I never believe that stuff
Cheers
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