In the News
Ryanair and Economies of Scale

10th May 2023
Might the Ryanair deal to buy up to 300 Boeing 737 Max-10s generate economies of scale? It is certainly a good applied example of monopsony power and internal growth of a business as the aviation industry seeks to expand following the pandemic. The FT reports that the deal is worth up to $40 billion and is expected to create upwards of 10,000 jobs.
Michael O'Leary is quoted as saying “These new, fuel-efficient, greener technology aircraft offer 21% more seats, burn 20% less fuel...we expect these new, larger, more efficient, greener aircraft to drive further unit cost savings". If falling unit costs aren't proof of economies of scale, then I don't know what is.
Ryanair to buy up to $40bn worth of Boeing aircraft and create 10,000 jobs https://t.co/SJ4ofavpNb
— Financial Times (@FT) May 9, 2023
WATCH: Ryanair unveiled a multibillion-dollar deal for as many as 300 Boeing jets, burying the hatchet with its biggest supplier after an 18-month public feud over prices. The deal delivers a boost to the largest version of Boeing's 737 MAX https://t.co/zWREjakCtW pic.twitter.com/c0cXFoxFAB
— Reuters Business (@ReutersBiz) May 10, 2023
Ryanair has grown rapidly to become one of Europe's largest passenger airlines. In this short study video we look at some of the factors that help explain the rapid expansion of revenues and (until recently) operating profits. Operating profits at Ryanair have taken off again after a turbulent time during and immediately after covid-19 restrictions. Ryanair reported a profit after tax of €211m for the three months to the end of 2022, against a loss of €96m a year previously. It is a return to profitability for one of the most successful low-cost airlines in the world.
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