Move comes amid Irish budget carrier's frustration with Boeing over option pricing

Ryanair claims to have driven down the market value of used Boeing 737s after advertising its requirement for up to 50 aircraft, as it begins cancelling options for new 737s. The Irish budget carrier says the response to its advertisement in Flight International last week more than meets its requirements, but it is continuing to talk to all interested parties to find the best deals.

Airline chairman Mike O'Leary says he is seriously discussing two offers for 10 and 15 737-300/400s and has tabled several smaller offers. The move follows O'Leary's frustration with Boeing's refusal to drop the price of the airline's 17 737-800 options from a level he calls "unrealistic in today's market".

The carrier, which is sitting on $700 million in cash, has cancelled its first five options due in 2003 and says it will cancel the remaining 12 unless Boeing offers significantly lower prices soon. Although O'Leary says the 189-seat -800, of which 28 are in service or on firm order, would suit his expansion plans better, the offers he has received for smaller, older generation -300s and -400s "below $15 million" each are "difficult to ignore".

Ryanair last week reported first quarter after-tax profits to June of €23.3 million ($20.6 million) - up 28% from the same period in 2000. During the same period, its passenger traffic rose 42%, but with lower yields. O'Leary says European budget carriers will continue to perform well even after the current downturn, because customers are becoming increasingly aware of the high fares charged by flag carriers.

With annual growth forecast to continue at 25%, Ryanair is likely to set up one or two more European hubs next year to add to Dublin, London Stansted and the new Brussels South Charleroi Airport, which opened in March. Candidates include airports in Denmark, Germany, Italy and Sweden. O'Leary says the selection will be based on "whichever airport makes us the best offer", but he hints that transfer difficulties into Frankfurt from Hahn may cool the enthusiasm for the airport.

Contrary to a report in Flight International (17-23 July), Ryanair says it has installed hushkits on its entire 21-strong fleet of 737-200s, bringing them into compliance with International Civil Aviation Organisation Chapter 3 noise legislation a year ahead of the deadline.

Source: Flight International