Ryanair continues to consolidate its European low-cost airline advantage through cost control

Overview

This report is Bernstein's in-depth study of Ryanair's cost advantage, with a central focus on unit costs. The report argues that, unlike some low-cost airlines that have shifted toward higher-cost hybrid models, Ryanair continues to reinforce its business model around low fares, high productivity, a single fleet, point-to-point routes and low-cost airports. Through MAX-10 deliveries, CFM parts agreements and the insourcing of engine maintenance, together with labor and airport cost discipline, the company is well positioned to maintain and expand its cost leadership for years to come.

Core views

The core view is that Ryanair's competitive advantage stems from structurally low unit costs, and that this advantage is being further locked in. The MAX-10 provides greater seat capacity and lower fuel, labor, navigation and maintenance costs; the CFM agreement enables engine maintenance to gradually shift from third-party PBH arrangements to proprietary heavy-maintenance capabilities; labor costs benefit from high aircraft utilization, a single aircraft type and compensation structures based on roles, bases and activity levels; airport costs benefit from scale, network flexibility and competition among airports for Ryanair capacity.

Analysis framework

The report uses a bottom-up cost decomposition approach to compare CASK across Ryanair's different narrow-body aircraft types, modeling fuel, labor, airport, navigation, maintenance, sales, administrative expenses and depreciation item by item. It also compares the in-house engine-maintenance model under the CFM agreement with outsourced PBH scenarios, assessing the long-term impact of investment, parts inflation, employee productivity, spare-engine requirements and third-party MRO margins on costs.

Methodology notes

• unit economicsCASK analysis

  Cost per available seat kilometer

  The report breaks down cost per ASK into fuel, employee, airport, navigation, maintenance, sales, administrative and depreciation items to compare the unit economics of the 737-NG, MAX-8200 and MAX-10.

• capital allocationIRR analysis

  IRR of in-house maintenance investment

  The report compares proprietary engine-maintenance capabilities supported by the CFM agreement with the outsourced PBH model, estimating an IRR of approximately 23% for in-house maintenance investment through 2041.

• Competition & strategycost leadership

  Cost leadership strategy

  The report attributes Ryanair's competitive advantage to low unit costs, scale-driven bargaining power, a single fleet, high productivity and a flexible airport network.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• RYAAY.US / RYANAIR HOLDINGS PLC

  Core covered asset

  Strengths

  Structurally low costs, scale-driven bargaining power, a single fleet, high labor productivity, airport-network flexibility, MAX-10 upgrades and in-house CFM maintenance.

  Weaknesses

  Growth has slowed from previous levels, MAX-10 deliveries and maintenance-facility construction will take time, and depreciation costs may rise.

  Comparison

  The report considers Ryanair and Wizz Air to be the two airlines with the lowest unit costs in European point-to-point aviation, but Ryanair has more mature scale, network flexibility and commercial execution capabilities.

  Risks

  Fuel prices, maintenance-cost inflation, aircraft-delivery delays, labor negotiations, airport charges and regulatory changes could affect the realization of the cost advantage.

Key data

• MAX-10 CASK advantage versus 737-NGapproximately 14%Both the summary and exhibits emphasize that the MAX-10 materially reduces unit costs; some detailed sections also mention a greater advantage of approximately 17%.
• MAX-10 CASK advantage versus MAX-8200approximately 7%Primarily driven by greater seat capacity, fuel efficiency and maintenance-cost dilution.
• MAX-10 seat capacity228 seatsHigher than the 189 seats of the 737-NG and the 197 seats of the 737-8200.
• IRR of CFM in-house maintenance programapproximately 23%The report estimates that insourcing Ryanair's engine overhauls could generate a high return on investment through 2041.
• Potential cumulative savings from CFM agreement€0.5-0.8bnSavings primarily come from lower parts inflation, higher productivity and reduced spare-engine requirements.
• Ryanair labor productivity43 employees per planeCompared with approximately 54 employees per plane at easyJet, indicating higher productivity.
• European market-share metricApproximately one in every five seats on intra-European routes in 2025 was operated by RyanairReflects Ryanair's scale and bargaining power with suppliers.
• Annual CFM parts procurement scaleMore than $1bnAnnual parts procurement is expected to exceed this level when the fleet approaches 800 aircraft and approximately 2,000 engines.

Impact & implications

The investment implications are positive. The report believes Ryanair has built a cost-minimization model rarely seen among high-ROIC airlines globally, and can continue strengthening its cost barriers through fleet upgrades and in-house maintenance for years to come. If these cost advantages materialize, Ryanair's earnings resilience, fare competitiveness and cash-return capability in the European point-to-point aviation market should continue to outperform most peers.

Risks

• MAX-10 deliveries begin in 2027. If Boeing delivery delays or technical issues arise, the timing of unit-cost improvements could be pushed back.
• Insourcing engine maintenance requires approximately €1.5bn of facility investment. If execution falls short of expectations, the IRR and savings could be below estimates.
• Tight MRO market conditions and parts and labor inflation could continue to push up maintenance costs.
• Airport charges, environmental policies, ETS costs or regulatory changes could weaken the advantage of low-cost airports.
• Renewal of labor agreements, strikes or localized labor-relations issues could still disrupt operations.
• Although higher fuel prices may increase the relative advantage of new aircraft types, absolute cost pressures would still affect industry profitability.

What to watch

• The delivery cadence and actual fleet-entry pace of the Boeing 737 MAX-10 after spring 2027.
• Construction progress of the two European engine-maintenance facilities at the end of 2028 and in 2029.
• Whether parts-cost inflation under the CFM agreement remains below the outsourced PBH scenario.
• Whether Ryanair continues shifting capacity from high-cost markets to countries with more favorable taxes, charges and airport incentives.
• Renewal of collective labor agreements in Italy and other major markets.
• Actual performance of unit costs, non-fuel costs and CASK during FY2027-FY2030.