This week an agreement was made with Boeing for up to 300 737 MAX 10 aircraft. IBA, the leading aviation market intelligence and consultancy company, notes that while only 150 will be firm orders, with the remaining being options, a narrowbody order of this scale is more typical of recent orders placed by carriers in Asia or the US. This order also dwarfs the 196 A321 aircraft order of Wizz Air in November 2021.

Ryanair is yet to report its full-year results for 2022 (March accounting year). However, its Q1-3 performance had been record-breaking. They had a net profit of EUR€1.5bn with a net margin of 16.4%.

Ryanair had hedged long in advance of the oil price volatility last year. This gave them a saving at the operational level compared to peers, while their low leasing and broader debt meant that most of that operating profit trickled down to the net level. A nine percentage point increase in load factor (up to 93%) also helped.

Such a performance is a good time to get the backing for large investment commitments, as seen here. However, the nature of this order is also significant to their strategy. These orders are for the larger MAX 10 variant. Ryanair’s current 737 MAX fleet has 197 seating capacity, compared to 189 seats in the 737-800 fleet, while the newly ordered aircraft are expected to be delivered in a 228-seat configuration.

This up gauging of the fleet will be to up capacity, with the slot constraints in European airports in mind. Higher seating capacities do also put a strain on turnaround times, although Ryanair’s principal use of secondary airports may afford slightly more flexibility.

Michael O’Leary also cites how Wizz Air achieves cost savings through the use of the higher capacity A321, and the MAX 10 will allow them to continue to compete on that front. Ryanair is also reportedly considering expansion to more Middle Eastern routes. Wizz Air recently set up a hub in Abu Dhabi, so this would also be mimicking the Hungarian carrier in that regard.

It is worth noting that the MAX 10 has a shorter range than the MAX 8, so the carrier may be moving away from fleet uniformity (ignoring technology generations and a few A320ceos), with aircraft for specific roles.

A final note is on how O’Leary was very public on how the airline will pay more than they planned for these aircraft, despite the order scale. This was in order to secure more near-dated delivery slots.

IBA values the 300-aircraft Ryanair deal at US$17.3 billion, based on its 2023 current Market Value for the 737 MAX 10. With the continued technical faults across the industry, it seems operators are paying a new premium to not be without aircraft.