Summer of discontent by Ryanair staff to eat into its profits

Summer discontent Ryanair staff eat profits

Hugely profitable budget airline sees its still considerable profits drop by a fifth as it faces strikes

Ryanair is warning of potential job losses after it posted financial results that showed that its profits dropped by more than a fifth.

For the first financial quarter of 2018 Ryanair’s profit after tax fell by 22 per cent to €309.2 million compared to the same period last year.

The hugely profitable budget airline profits from high passenger volumes and low operating costs. It flies in 37 countries and carried 130 million passengers last year. It had warned analysts and shareholders of the likely dip in profits because of higher oil prices and pilot costs and other factors.

But it has since been contending with a summer of industrial unrest with separate strikes by pilots, cabin crew, ground staff and air traffic controllers in France and Spain.

The airline warned that it may start to let staff go and restrict it winter schedules.

The airline warned that it may start to let staff go and restrict it winter schedules.

“If these unnecessary strikes continue to damage customer confidence and forward prices/yields in certain country markets then we will have to review our winter schedule.

“(This) may lead to fleet reductions at disrupted bases and job losses in markets where competitor employees are interfering in our negotiations with our people and their unions,” the airline warned as it announced its profits fall.

It said it expects further strikes over the summer because it is “not prepared to concede to unreasonable demands”.

This week it once again faced a one-day strike by its pilots in Dublin, seeking better conditions and pay, and was also forced to cancel at least 600 of its 2,400 daily flights in Europe because of strikes by cabin crew staff in Spain, Portugal and Belgium.

“Despite signing pilot and cabin crew union recognition agreements in our major markets — the UK and Italy, and a recent agreement in Germany … progress has been slower in smaller markets,” Ryanair said.

Engage

“While we continue to actively engage with pilot and cabin crew unions across Europe, we expect further strikes over the peak summer period as we are not prepared to concede to unreasonable demands that will compromise either our low fares or our highly efficient model,” it said. “Staff costs increased by 34 per cent primarily due to pilot 20 per cent pay increases, 9 per cent more flight hours and a 3 per cent general pay increase for our non-flight staff,” it said.

Summer discontent Ryanair staff eat profits

It also noted that in the past year oil prices rose from $50 per barrel to almost $80 per barrel.

In spite of its difficulties Ryanair’s passenger traffic increased by 7 per cent to 37.6 million people in the first three months of this year and revenues increased by nearly 10 per cent to almost €2.1 billion.

Profitability

The airline’s CEO Michael O’Leary there was no denying that more recently the airline’s profitability had been affected by “the World Cup, the heat wave and customer uncertainty about pilot strikes”.

He said the airline would consider moving planes from some markets, including Ireland, if disruptions continue and that this could lead to job losses.

“We cannot allow our customers flights to be unnecessarily disrupted by a tiny minority of pilots,” he said.

Separately, the airline also admitted that it expects the Austrian holiday airline Laudamotion, which it agreed to buy earlier this year, to post annual losses of €150m, up from an earlier estimate of €100m. It said it is still going to increase its stake in Laudamotion to 75 per cent from 25 per cent when it gets the necessary regulatory approval.

Meanwhile, EasyJet, Europe’s second-biggest low-cost airline, forecast that its earnings for this year could be up by as much as 45 per cent this year.


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