Paris 2011: Ryanair MoU on C919 ratchets up pressure on Boeing and Airbus

Ryanair has taken a bold first step towards becoming a customer for Commercial Aircraft Corporation of China’s (COMAC) new C919. At the Paris Air Show, the carrier signed an MoU to participate in discussions on the development of a version of the C919 for Ryanair.

The C919’s baseline version will seat 168-190 passengers and is expected to commence test flying in 2014, with commercial service commencing in 2016. The version for Ryanair would be designed to carry up to 200 passengers and should be available from 2018 onwards. Ryanair CEO, Michael O’Leary stated at Le Bourget that if COMAC “can get the costs right, then we will certainly place a big order with them”. Ryanair is “now committed to COMAC in the same way we are committed to Boeing”. Support from Ryanair will go a long way to winning over sceptics on the aircraft and breaking the duopoly between Airbus and Boeing.

COMAC has already announced 55 orders from four Chinese airlines – China Eastern, China Southern, Air China and Hainan Airlines – as well as two leasing companies - CDB Leasing Company and GE Capital Aviation Services – but believes it could have more than 200 commitments by the end of the year.

Ryanair’s existing fleet is comprised of 273 B737-800s, each with 189 seats. The carrier has another 39 on order, due for delivery over the next three years.

In 2009, Ryanair held negotiations with Boeing over a fleet purchase, potentially for up to 200 aircraft. However, negotiations were broken off late in the year, marking a major change in direction for the aggressively expanding carrier. Ryanair stated that it had agreed with Boeing on price, but the manufacturer had changed delivery conditions, leading to the break-down.

Boeing pressed over narrowbody replacement

The narrowbody airline market is forecast to be worth just under USD2 trillion over the next 20 years. Boeing expects around 23,400 narrowbodies will be ordered between 2011 and 2030. COMAC expects to sell around 2,000 C919s over the same period.

A potential defection by Ryanair to the C919 and strong orders for the A320/321neo are signs that Boeing’s lack of clarity over the future of its narrowbody programme is starting to leave some in the industry cold. Mr O’Leary commented at Le Bourget that Boeing appears “confused” over its future narrowbody programme. Boeing is expected to announce a decision on its direction with its narrowbody programme by the end of 2011. Boeing’s stated preference is to go with a new aircraft for 2019/2020, but the option to re-develop the B737NG with new engines is still being kept on the shelf by the manufacturer.

Mr O’Leary said that he does not believe that re-engineering the B737NG is going to be sufficient to respond to the A320neo or the C919. He believes that until Boeing has determined its direction, airlines will be reluctant to commit to the B737. Boeing has sold 65 B737NGs this year, while Airbus has taken orders and commitments for just under 600 A320neo aircraft since its launch in Dec-2010.

Ryanair would prefer to see a redesigned aircraft that would focus on additional capacity, a lighter airframe and more fuel-efficient engines. Boeing has been working to integrate technologies developed for the B787 into a smaller aircraft, but scaling down the technology is not an easy process.

The preference for an all-new aircraft is shared by many other Boeing customers, including some of its most influential clients. Southwest Airlines, the world’s largest B737 operator - with a fleet of 550 B737-300/700s and another 102 on order – has also been voluble about the need for an all-new narrowbody from the US manufacturer.

Industry commentary suggests that most Boeing customers would be willing to wait for a new aircraft. Air Lease Corp co-founder John Plueger stated at the Paris Air Show that none of the airlines the leasing company is talking to believe that Boeing should move to re-engine the B737NG.

For its part, Boeing has stated it is in no rush to make an announcement. It wants to get the decision right: the direction it takes will set its narrowbody strategy for the next few decade, at the very least.

The C919: A serious alternative

According to Mr O’Leary, the carrier is likely to place a new aircraft order in 2014 or 2015, after “putting the brakes” on its fleet expansion in 2013, when the last of its current order for B737s are due.

COMAC’s C919 is a “very serious alternative” according to Mr O’Leary. He expects that the aircraft will “put a large hole in the Boeing and Airbus narrowbody order programme” after its commercial debut in 2016. Ryanair has also held talks with Russia’s state-controlled United Aircraft Corporation aerospace conglomerate, but Mr O’Leary feels that the Russian manufacturer is not as advanced as COMAC nor do they have the same level of resources to devote to their narrowbody project. Irkut is developing the MS-21 narrowbody under the UAC umbrella.

The C919 is being extensively developed with support from Western suppliers - particularly French and US – with around 80% of design and manufacturing done in partnerships between Western and Chinese firms. COMAC hopes to lower this level to around 50% through the life of the programme. CFM International signed a contract to be the exclusive 'Western engine supplier' at Le Bourget. COMAC hopes to have locally developed engine on the aircraft prior to 2020.

Mr O’Leary forecast that Chinese manufacturers would bridge any technological gaps and be as strong as Airbus or Boeing in one to two decades.

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