Ryanair and jet engine maker CFM International unveiled a deal today to support the airline's plans to open two engine maintenance shops with a flow of spare parts, securing scarce supplies for the next 15 years.
The plants will probably be based in continental Europe and the first will open as early as 2028, using Ryanair's financial strength to purchase parts early at a time of industry-wide shortages, Ryanair chief executive Michael O'Leary told a news conference.
At a press conference in Paris today, the Ryanair chief joked about high engine prices, saying he had suffered a comparable defeat in talks with CFM's French co-owner Safran.
"Beware the French bearing gifts; this is going to cost me," Michael O'Leary said as he signed the parts deal at the headquarters of Safran, which jointly makes engines for Boeing and some Airbus jets with GE Aerospace through CFM.
Under the provisional agreement, Ryanair will buy all its engine parts directly from CFM and take over maintenance when the new shops are up and running.
The companies said that over the 15-year term, Ryanair would commit to parts worth more than $1 billion a year.
Today's press conference drew attention to the increased bargaining power of firms like Safran, one of the world's largest aerospace contractors.
Mr O'Leary declined to back strong criticism of the engine industry by the head of the International Air Transport Association, fellow Irishman Willie Walsh, saying the trade group's airline members were themselves prone to raising prices.
Olivier Andries, CEO of Safran, which also makes such aircraft parts as brakes and landing gear, said engine makers needed to harvest a return on upfront investments over many years.
Ryanair has said that by setting up its own engine shops and aggressively buying spare engines and parts at a time of manufacturing bottlenecks, it can widen its cost advantage over competitors wholly reliant on expensive third-party supplies.
For CFM, the parts deal eases demands on the capacity of its own repair network and those of independent maintenance firms.
Michael O'Leary said that for the last 30 years, CFM has been maintaining all of Ryanair's CFM56 engines under a long term "power by the hour" contract.
But he said that from 2029 onwards, Ryanair expects to bring the maintenance of its engines "in-house", with the help and support of its partners CFM.
"Ryanair will place substantial orders for initial spare parts provisioning with CFM to support the opening of each of these two Ryanair engine maintenance facilities," the airline boss said.
"When Ryanair takes over all its engine maintenance in-house, we expect this contract will be worth in excess of $1 billion annually to CFM in spare engines and spare parts supplies," he said.
"This new spare parts agreement extends our 30 year partnership with CFM, and we look forward to working closely with CFM, Safran and GE to support what will be one of the world's largest commercial aircraft fleets, and one of the world's largest packages of Boeing 737 engines too," he added.
Olivier Andriès, CEO of Safran, said today's deal further strengthens the strategic relationship the company has built with Ryanair over the past three decades.
"We are proud to support their continued growth through this comprehensive MRO services offering," Olivier Andriès said.
"With the ongoing success of the CFM56 and the rapid growth of the LEAP fleet, we are investing to build a global MRO network within an open and competitive ecosystem to help our airline customers optimise fleet efficiency and control operational costs," he added.
H Lawrence Culp, Jr chairman and CEO of GE Aerospace, said that Ryanair is one of the company's largest customers.
"We value the opportunity to work with them on solutions to increase capacity and reduce turnaround time. This MoU demonstrates our commitment to an open MRO ecosystem that supports growing demand while reducing cost of ownership," he added.
Shares in Ryanair were lower in Dublin trade today.
