Ryanair may “take advantage of market softness” and add to its Boeing 737 Max orderbook by the end of the year, Davy Research has predicted in a new report.

Davy’s analysis, published on 16 September, foresees an “uneven road to recovery” for Europe’s airlines, with capacity likely to be 20% lower in 2021 than in 2019 as “the bulk of airlines shrink operations”. This will “create opportunities” for low-cost carriers to grow their networks and expand their fleets.

“We expect Ryanair to take advantage of market softness in the coming years with a Boeing Max announcement likely before year-end,” suggests Davy in its report.

Cirium fleets data shows that Ryanair has 129 Max 200 aircraft on firm order, none of which have yet been delivered, and holds options on an additional 75. The airline hopes to introduce its first Max this year and expects to take delivery of 40 ahead of the 2021 summer season.

Ryanair group chief executive Michael O’Leary indicated on a third-quarter earnings call in February that the carrier could place another Max order once the aircraft had returned to service.

The airline has been shoring up its balance sheet in recent weeks, having raised €400 million ($472 million) through a share offering and issued a five-year €850 million eurobond at a fixed rate of 2.875%.

Davy points out in its analysis that airlines have raised a total of €204 billion of new debt this year, of which €41 billion has come from the capital markets.

“While the availability of capital market financing is positive, reflecting some confidence in the industry, the credit downgrades have raised the cost of borrowing in an era of low treasury yields,” says the report. “Consequently, airlines will exit the worst of the crisis not only with greater levels of debt but also with a higher cost of debt.”

Davy expects that the Covid-19 crisis will “hasten” the disappearance of “weaker airlines” such as Alitalia and Norwegian and cause “stronger airlines” such as Lufthansa to contract.

“As we enter the winter season, when cash burn is traditionally the highest, we expect more failures and heightened consolidation in the sector,” writes Davy. “There will be winners and losers, but all airlines may need to park parts of their fleet throughout the winter to protect cash balances.”

Airlines with the lowest costs will be among the winners and will be best-placed to take advantage of market opportunities, suggests the report: “In essence, we should be looking for an industry with less cost, less capacity and even fewer companies. Hence the opportunity.”