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Showing posts from May 17, 2012

Ryanair: Waiting in the Long Grass ©

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                                                          Yesterday (Wednesday 16 th May) Southwest Airlines announced that it is to defer the delivery of 30 Boeing 737-800s from 2013/4 to 2017/8 to reduce capital spending by $1 Billion and to help it improve its Rate of Return on Capital (ROCE) to 15%.   The Southwest Airlines CEO Gary Kelly stated “ Until we hit our return on capital target, we don't plan to grow our fleet, we will keep our fleet roughly flat and maybe slightly down (in) 2012." The Southwest Airlines delivery deferment will put further pressure on OEM’s in an increasingly competitive market, as a number of high profile carriers have already indicated they will defer orders to concentrate on improving their own financial performance and generating higher returns on capital, these announcements will further strengthen the hand of Ryanair in negotiations for a new order of up to 400 new aircraft with its cash reserves of €3.5 Billion.