European airline Ryanair has committed to order 100 of Boeing’s 737 MAX 200 airplanes, valued at $11 billion at list prices.
Buyers often get steep discounts off list prices for passenger jets.
Ryanair has options to buy another 100 of the 737 MAX 200s as well.
The 737 MAX 200 is considered more fuel-efficient than most other current single-aisle airplanes and can accommodate up to 200 seats.
— Boeing Airplanes (@BoeingAirplanes) September 8, 2014
Ryanair runs more than 1,600 flights daily. CEO Michael O’Leary said in a statement Monday the 737 MAX 200 order will allow Ryanair to reduce its costs and airfares. It will also expand Ryanair’s fleet to 520 airplanes by 2024 and create another 3,000 new jobs for pilots, cabin crew and engineers in Europe, he added.
O’Leary anticipates the order helping Ryanair increase its traffic to more than 150 million annually by 2024. Its 2013 traffic totaled 82 million.
Stephen Levenson of Stifel Nicolaus said in a client note that since most of Ryanair’s flights are less than 2.5 hours, the high density seating plan of the 737 MAX 200 is ideal for its operations.
The analyst also believes any backlog growth concerns investors have for Boeing should be wiped away by the announcement of the Ryanair order. Levenson anticipates that even if Boeing’s 2015 orders don’t keep pace with the previous year, its outlook is still strong for earnings and cash flow growth in 2015, 2016 and the future.
Levenson maintained a “Buy” rating for Boeing Co.
The company’s stock added $3.01, or 2.4 percent, to $127.70 in midday trading.
Ryanair launched a business-class ticket last month despite its no-frills tradition. It hopes having a business class will enable it it to capture three-fourths of work travel between Britain and Ireland, its two biggest markets.
THE ASSOCIATED PRESS