Business

1/12/2024, 4:00 PM

Ryanair CEO warns: High costs hinder growth in Germany

Ryanair, Europe's largest low-cost airline, sees its growth in Germany limited by high location costs.

Ryanair is forced to limit its flight routes in Germany due to high location costs. In an interview with Reuters TV in Berlin, the CEO of the airline, Michael O'Leary, said that they will only grow at regional airports that can offer competitive costs. So far, destinations such as Memmingen, Baden-Baden, Nuremberg, or Hahn in Rheinland-Pfalz meet these criteria.

According to O'Leary, the government should focus more on reducing overall costs instead of increasing the ticket tax. He emphasized that high flight costs in Germany were a burden for consumers and would adversely affect tourism and the country's economy.

On the other hand, Ryanair could double its traffic volume from its current 16 million passengers to 34 million passengers in the next six years if Germany were to introduce more competitive taxes, levies, and airport fees.

Currently, Ryanair is growing annually by about four to five percent, while growth in Poland is in double digits and in Italy it is even around 25 percent. The airline currently operates 14 aircraft in Germany at seven locations and is the number two in the market with a market share of nine percent, after Lufthansa.

Following the incident with a Boeing 737 MAX, in which a cabin wall broke during the flight, O'Leary currently sees no impact on Ryanair's customers. "We have not noticed any signs of concern among our passengers," he emphasized. "Not a single passenger has complained."

According to O'Leary, the affected models are MAX9 and the MAX8 used by Ryanair, as well as the ordered MAX10 model are not affected. This is the result of long phone conversations with American, European, and Irish regulatory authorities last weekend.

After the incident, the US aviation authority FAA imposed a flight ban on 171 Boeing 737 MAX aircraft, which are not being used in Europe. Since then, the management of the US aircraft manufacturer Boeing has been under great pressure to justify themselves.

O'Leary said that Boeing has made "enormous progress" in terms of production quality in recent years, but still has not reached its goal.

Even Ryanair has identified minor issues during aircraft deliveries that should not be present in a world-class manufacturer like Boeing. Therefore, it is important that Boeing takes even more action in terms of quality control.

O'Leary emphasized, however, that he continues to have 100 percent trust in Boeing and has great confidence in CEO Dave Calhoun and CFO Brian West. Nevertheless, there are still concerns regarding daily production management at Boeing in Seattle and at supplier Spirit AeroSystems in Wichita.

"Although the management in Wichita has already been replaced, I believe that more efforts are necessary in the daily operations in Seattle," said O'Leary. The Ryanair stock temporarily rose by 1.52 percent to 18.35 euros on the Dublin stock exchange.

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