Ryanair 2010 Annual Report Download - page 62

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AIRCRAFT
Aircraft
As of June 30, 2010, Ryanair’s operating fleet was composed of 250 Boeing 737-800 “next generation”
aircraft, each having 189 seats. Ryanair’s fleet totaled 232 Boeing 737-800s at March 31, 2010. The Company
expects to have an operating fleet comprising 272 Boeing 737-800s at March 31, 2011.
Between March 1999 and June 30, 2010, Ryanair took delivery of 276 new Boeing 737-800 “next
generation” aircraft under its contracts with Boeing (and disposed of 26 such aircraft). The new Boeing 737-
800s share certain basic characteristics with Ryanair’s prior fleet of Boeing 737-200A aircraft, all of which were
retired by December 2005. However, the new aircraft are larger (seating up to 189 passengers, as compared to
130 in the Boeing 737-200As), capable of longer flights without refueling, and incorporate more advanced
aviation technology. The Boeing 737-800s also comply with Chapter 3 noise reduction requirements established
by the ICAO, which took effect in the EU in 2002.
Ryanair entered into a series of agreements with Boeing for Boeing 737-800 “next generation” aircraft
starting in 1998. As of January 2005, 89 firm-order aircraft remained to be delivered under those agreements,
and the Company had options to purchase an additional 123 aircraft. On February 24, 2005, the Company
announced that it had entered into a new agreement with Boeing for the purchase of a further 70 new Boeing
737-800s as well as purchase options for an additional 70 such aircraft.
Under the terms of the 2005 Boeing contract, while the basic price per aircraft that was applicable
under the prior contracts continued to apply to the firm-order aircraft that remained to be delivered and purchase
options outstanding thereunder, these firm-order and option aircraft became subject to the commercial and other
terms applicable to the firm-order aircraft under the 2005 Boeing contract, including benefiting from more
favorable price concessions.
In addition, as part of the 2005 contract with Boeing, the Company ensured that “winglets,” or wing-tip
extensions, manufactured by Aviation Partners Boeing (“APB”) would be incorporated into all aircraft to be
delivered to the Company under its contracts with Boeing from January 2006 onwards. The cost of these
winglets is included in the net price of each aircraft. APB agreed to supply the winglets at a discounted rate for
all of the Boeing 737-800s delivered to Ryanair prior to January 2006. The cost of retrofitting all of these
winglets was borne by Ryanair and the retrofitting was carried out during routine maintenance at the Company’s
facility at Glasgow (Prestwick). The winglets are attached to the existing wings and improve the aerodynamics
of the aircraft; as a result, the aircraft consume less fuel per flight-hour. The winglet modification program has
proved effective, with better aircraft performance and a reduction of approximately 4% in each aircraft’s
consumption of fuel per hour flown.
On December 18, 2009, the Company announced that it was unable to conclude negotiations with
Boeing in respect of a new agreement for the purchase of 100 new Boeing 737-800 series aircraft (with an
option to purchase an additional 100) for delivery during the period 2013 to 2015. Although the Company had
reached agreement with Boeing in relation to the aircraft price it was unable to conclude negotiations regarding
other terms and conditions. The Company has no immediate plans to re-commence negotiations with Boeing.
With the surplus cash that resulted from unsuccessful negotiations with Boeing, the Company has, subject to
shareholder approval, decided to pay a special dividend of 1500 million. See “Item 8. Financial Information—
Other Financial Information—Dividend Policy.”