Pilots in driving seat as Ryanair crisis boils down to money

Pilot shortage has left region’s biggest carrier exposed

Ryanair is to offer pilots in Dublin and other bases an extra €10,000 a-year to deter them from joining rival airlines, chief executive Michael O’Leary has said at a press briefing following the company's agm.

 

Ryanair chief executive Michael O’Leary conceded on Thursday that the low-cost airline had pushed things a bit far with its pilots. The airline’s flight crews are at the centre of the crisis that prompted it to cancel an average of 50 flights a day for the next six weeks, hitting more than 350,000 of its passengers.

While the problem is rooted in too many holidays being allocated to pilots in a short period, as the story unfolded this week there were increasing reports of defections and unrest among their ranks. The airline is offering some of its pilots €10,000 bonuses to prevent them leaving and the same amount to others to sign up.

“One of the issues that I think we have to address is that maybe we have got the pilot pay a bit on the low side,” O’Leary said. “Maybe we have pushed it a little bit far in terms of pilot pay and pilot productivity.” He added the airline would address specific issues where they come up.

The specific issue that sparked the cancellation crisis was that up to 500 of Ryanair’s pilots are taking four weeks’ leave each in the coming months, a rostering gaffe that left it without sufficient numbers to cover all eventualities while it continued to operate its summer schedule up to the end of October.

The airline maintains the best way of dealing with this was to cancel 2 per cent of its flights during that time, as attempting to operate a full schedule would have disrupted four or five out of every 10 of its services.

The holiday problem stemmed from the fact that Ryanair changed the period over which leave was calculated to the calendar year. Up to 2017, it had used its own financial year, April 1st to March 31st, as the basis for working out holidays, but amended regulations required that it switch to January 1st to December 31st.

Greener pastures

An alternative explanation was that pilots were deserting the airline, which makes no secret of the fact that it demands high levels of productivity from staff, for greener and less strenuous pastures. Rival Norwegian Air International said that it poached 140 Ryanair pilots over the last year. The Irish Airline Pilots’ Association (IALPA) estimated up to 700 left the carrier in the 12 months ended on March 31st.

The Ryanair customer service desk at Dublin Airport
The Ryanair customer service desk at Dublin Airport

O’Leary was quick to pooh-pooh these claims. He responded that fewer than 100 pilots had left for Norwegian over the last year, drawn mainly by the opportunity to fly long-haul routes. Of the IALPA figures, he said that these were based on mathematically faulty analysis of information that it provided to the Securities and Exchange Commission, the US stock market regulator.

At a press conference on Monday, he said bluntly that there was no shortage of pilots. Ryanair had 4,200 of them, equivalent to more than five flight crew for each of its aircraft. About 5 per cent of them, more than 200, leave every year.

He told shareholders at the annual general meeting on Thursday that Ryanair had recently recruited 125 pilots, who would begin flying with it as they completed short periods of training in coming weeks. It also plans to hire 600 between now and next June and would have little problem finding them. “There is a waiting list of 2,500 pilots who are gagging to join Ryanair,” he said at one point.

Despite this, there were reports that the pilots were not happy with current conditions. Ryanair’s employee representative councils told the company that the €12,000 it was offering pilots to buy a week of their leave back was not enough.

Along with that, they sought improved terms and conditions, and called for a professional negotiator to facilitate talks with the company, something unlikely to be well-received in an organisation that has always refused to deal with unions.

Work to rule

There were also reports that a letter circulated among pilots called for a work to rule, a type of limited industrial action where employees adhere strictly to their terms. This would rule out concessions such as pilots working on days off to cover unforeseen shortages. On Thursday evening, pilots in Dublin, Shannon and Barcelona were reported to have joined others in rejecting the offer to buy back leave.

In response, O’Leary pointed out the airline’s terms and conditions require pilots to give up leave if requested. In other words, the airline can cancel the leave if it needed to. He maintained that when it asked them on Monday to give up leave, the airline got responses from staff willing to work an extra 2,500 days in total. “There’s been huge co-operation,” he said.

According to him, the only communication with its representative councils were meetings on Wednesday with those from Dublin, Stansted, Frankfurt and Berlin, which responded with “delight” at the news their members were getting €10,000-a-year base supplements on top of their current salaries. He dismissed the other communications as “anonymous, circular emails that have the same credibility as twitter feeds”.

Nevertheless, both during and after the agm, O’Leary confirmed that Ryanair is facing either a shortage of pilots or difficulty in recruiting enough of them in some areas.

Pilots based at the four airports, whose representatives met management on Wednesday, will get the €10,000 a year supplement beginning on October 1st. One of those is Dublin, where O’Leary acknowledged that Norwegian was indeed bidding to recruit some of the company’s pilots.

Ryanair plane parked on the tarmac at Dublin Airport. Photograph: Paul Faith/AFP/Getty Images
Ryanair plane parked on the tarmac at Dublin Airport. Photograph: Paul Faith/AFP/Getty Images

The airline will pay this on top of salaries, which are €150,000-€180,000 a year for captains and €80,000-€120,000 a year for first officers. The loyalty bonus and other payments could add up to an extra €22,000 for some captains. It is also offering a signing-up bonus of €10,000 to some first officers joining the airline at any base between October and April.

Norwegian threat

While he stuck with his theory that Norwegian would not last another 12 months, he still agreed it posed a threat on this front because it flies long haul, something to which most pilots, including Ryanair’s, aspire.

“If some long-haul carrier shows up in Dublin offering long-haul flights, and says ‘you can fly to New York and fly back two days later, or you can fly to Luton four times a day’, I can understand why,” O’Leary said.

Historically, Ryanair pilots have tended to go to long-haul operators. They typically reach the rank of captain by their mid-thirties and have the flying hours and the experience that makes them attractive to such carriers.

A few years ago it was the gulf airlines, Qatar, Emirates and Etihad, that accounted for a high proportion of the defections. They have stopped or slowed recruitment, but the arrival of Norwegian, with its plans to offer low-cost flights from Europe to the US and Asia, means that alternative employment has moved closer to home.

At Stansted, one of its biggest bases, Ryanair also faces a shortage. In Berlin and Frankfurt, O’Leary said that pilots from outside Germany were for some reason unwilling to move there. The loyalty bonus is meant to address those problems.

Representatives from other bases in Italy, Spain and elsewhere are seeking meetings where they are going to look for the same payments. “We’ll pay supplements in places where either we have a shortage of pilots or we want to recruit more pilots,” O’Leary said.

Possible redundancy

Even while he talked about shortages in some bases, O’Leary several times pointed to the insolvent Alitalia, which Ryanair is bidding to buy, and Air Berlin, for which it said wanted to bid. Their pilots face possible redundancy.

That may be true, but the bottom line appears to be that there are shortages of pilots in at least some parts of Europe. As the region’s biggest carrier, Ryanair is exposed to this. At the same time, it’s clear that pilots themselves understand this and are seeking to press home their advantage. It is likely that the solution to this will ultimately come down to money.

RYANAIR’S AGM: TOUCHDOWN AFTER A TORRID WEEK

Ryanair’s annual general meeting came at the end of a torrid week for the airline and its chief executive, Michael O’Leary.

Between close of business on Wednesday, September 13th, and Thursday, September 21st, when Ryanair’s shares closed at €16.52, almost €1.8 billion had been wiped off the airline’s value.

On Friday it announced that it was cancelling an average of 50 flights a day for the next six weeks, blaming punctuality, air traffic control strikes and weather. More than 350,000 passengers will be affected.

On Monday, Ryanair apologised and confirmed that the problem stemmed from a mix-up in pilots’ holiday rosters brought about by a change in regulation.

About 500 of its pilots are taking four weeks’ annual leave each in coming months, leaving it without sufficient flying crew to deal with all eventualities.

That was compounded by reports, denied strongly by Ryanair, that pilots were defecting and that there was growing unrest among those that remained with the airline.

On Wednesday, Ryanair said that 90 per cent of affected passengers would be reaccommodated and/or have their compensation processed by the end of this week. At the agm, O’Leary once again apologised and told shareholders that he was taking full responsibility for the debacle.

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