Ryanair 2016 Annual Report Download - page 75

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entered into an agreement with Amadeus and an agreement was also concluded with Sabre in May 2015 (collectively
“GDSs”). The Company’s fares (except for the three lowest fare categories) will be distributed on the GDSs systems.
Ryanair has negotiated an attractive per segment price and expects to sell tickets via travel agents at no commission to a
mix of largely business/corporate travelers. See Item 3. Key Information—Risk Factors—Risks Related to the Company—
Ryanair Faces Risks Related to Unauthorized Use of Information from the Company’s Website.”
AIRCRAFT
Aircraft
As of June 30, 2016, Ryanair had a principal fleet of over 350 Boeing 737-800 aircraft. The principal fleet was
composed of Boeing 737-800 “next generation” aircraft, each having 189 seats. Ryanair’s fleet totaled 341 Boeing 737-
800s at March 31, 2016. The Company expects to have an operating fleet comprising approximately 546 Boeing 737s at
March 31, 2024 depending on the level of lease returns/disposals. This operating fleet will comprise a mix of Boeing 737-
800s and Boeing 737-MAX-200 aircraft. The 737-MAX-200 aircraft, which will start being delivered during fiscal 2020,
will have 197 seats.
Between March 1999 and March 2016, Ryanair took delivery of 400 new Boeing 737-800 “next generation”
aircraft under its contracts with Boeing and disposed of 60 such aircraft, including 34 lease handbacks.
Under the terms of the 2013 Boeing Contract, Ryanair has agreed to purchase the 183 new Boeing 737-800 aircraft
over a five-year period from fiscal 2015 to 2019, with delivery beginning in September 2014. The new aircraft will benefit
from a net effective price not dissimilar to that under the 2005 Boeing Contract which was approved by shareholders in
2005. Under the terms of the 2014 Boeing Contract, Ryanair has agreed to purchase up to 200 new Boeing 737-MAX-200
aircraft (100 firm orders and 100 aircraft subject to option) over a five-year period from fiscal 2020 to 2024, with delivery
beginning in August 2019. The new aircraft will be used on new and existing routes to grow Ryanair’s business.
The Boeing 737-800 represents the current generation of Boeing’s 737 aircraft. It is a short-to-medium range
aircraft and seats 189 passengers. The basic price (equivalent to a standard list price for an aircraft of this type) for each of
the Boeing 737-800 series aircraft is approximately US$78.5 million and the basic price will be increased for certain
“buyer-furnished” equipment, amounting to approximately US$2.9 million per new aircraft, which Ryanair has asked
Boeing to purchase and install on each of the new aircraft. In addition, an “Escalation Factor” will be applied to the basic
price to reflect increases in the Employment Cost Index and Producer Price Index between the time the basic price was set
in the 2013 Boeing Contract and the period 18 to 24 months prior to the delivery of any such new aircraft.
Boeing has granted Ryanair certain price concessions as part of the 2013 Boeing Contract. These will take the
form of credit memoranda to Ryanair for the amount of such concessions, which Ryanair may apply toward the purchase
of goods and services from Boeing or toward certain payments, other than advance payments, in respect of the new aircraft.
Boeing and CFMI (the manufacturer of the engines to be fitted on the new aircraft) have also agreed to provide Ryanair
with certain allowances for promotional and other activities, as well as providing certain other goods and services to
Ryanair on concessionary terms. Those credit memoranda and promotional allowances will effectively reduce the price of
each new aircraft payable by Ryanair. As a result, the “effective price” (the purchase price of the new aircraft net of
discounts received from Boeing) of each new aircraft will be significantly below the basic price mentioned above. The
effective price applies to all new aircraft due for delivery from September 2014.
The Boeing 737-MAX-200 represents the newest generation of Boeing's 737 aircraft. It is a short-to-medium
range aircraft and seats 197 passengers (eight more than Ryanair’s existing 189 seat fleet). The basic price (equivalent to
a standard list price for an aircraft of this type) for each of the Boeing 737-MAX-200 series aircraft is approximately
US$102 million and the basic price will be increased for certain "buyer-furnished" equipment, amounting to approximately
US$1.6 million per new aircraft, which Ryanair has asked Boeing to purchase and install on each of the new aircraft. In
addition, an “Escalation Factor” will be applied to the basic price to reflect increases in the Employment Cost Index and
Producer Price Index between the time the basic price was set in the 2014 Boeing Contract and the planned month of
delivery of any such new aircraft.
Boeing has granted Ryanair certain price concessions as part of the 2014 Boeing Contract. These will take the
form of credit memoranda to Ryanair for the amount of such concessions, which Ryanair may apply toward the purchase