Analyst Upbeat On Boeing After Ryanair Buy

May 10, 2023
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Leading aviation analyst New York-based Bernstein has hailed the Ryanair buy of 300 737MAX-10 aircraft as a positive outcome for Boeing.

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“Ryanair CEO O’Leary said Ryanair was paying a higher price than its initial goal, but that it was worth it to have the aircraft booked at a time when slots are increasingly tight,” Bernstein said in a client note.

Deliveries are to be from 2027-33.

“When O’Leary says he paid a higher price, we are careful about making assumptions, given
that he is possibly the shrewdest negotiator in the industry. Ryanair, like Southwest, is a key
customer for Boeing as its aircraft are relatively inexpensive (e.g., no galleys, basic interiors)
and the large quantities can base load the 737 lines.

“This allows Boeing teams in revenue management to then add higher priced aircraft from smaller airlines to deliver margin goals. Boeing has guided to 50/month 737s by 2025/26, which can be done on the three existing lines in Renton.

“We see the Ryanair order as a step in facilitating higher delivery rates, with a new 737 line being built out in the 787 bay in Everett. Adding to a positive outlook, Boeing CEO Calhoun expressed optimism that 737MAX deliveries to China could restart soon. Those deliveries are not needed to reach Boeing’s 2025-26 guidance,” Bernstein said.

The analyst added that “the order also provides more support for the 737MAX-10, which we believe has attractive economics if one does not need the range of the A321XLR (as United and Delta have indicated).”

Bernstein said it “continues to be positive on Boeing’s stock. With rising traffic, a strong delivery outlook,
improving cash flow, and the most critical BCA issues appearing to be behind them, conditions now set up in ways very similar to prior periods of outperformance.”