Hell might freeze over as Ryanair sits down with unions

Business Week: also in the news was Brexit woes; housing crisis; and the economy

Ryanair boss Michael O’Leary might sit out talks with pilots, having only recently said they “do not have a difficult job”. Photograph: Nick Bradshaw

Ryanair boss Michael O’Leary might sit out talks with pilots, having only recently said they “do not have a difficult job”. Photograph: Nick Bradshaw

 

Ryanair chief executive Michael O’Leary famously said hell would have to freeze over or that he would cut off both his arms before he would negotiate with trade unions.

Well, following on from Ryanair’s move to abandon its long-standing policy not to recognise unions last year – which O’Leary later claimed was his idea – the outspoken company chief could soon find himself sitting across the table from them.

Thousands of holidaymakers are facing disruption next week after the directly-employed Ryanair pilots in Ireland voted to strike next Thursday. It could be the first of a series of stoppages by members of the Irish Airline Pilots’ Association (Ialpa), part of trade union Fórsa.

The row is over seniority, with pilots seeking a system covering base allocation and transfers, promotion, the timing of annual leave and other issues determined by length of service, with the unions complaining there is no transparent system for such issues.

To make matters worse for the airline, the strife has spread to other jurisdictions, with German pilot union VC balloting members in Ryanair on industrial action following the failure of talks on improved pay and conditions.

Elsewhere, cabin crew in Portugal, Belgium and Spain – Ryanair’s third largest market – are planning 48-hour strikes on July 25th and 26th. Cabin crew in Italy, the airline’s second biggest territory, will strike for one day on July 25th.

It’s a high-stakes game for all concerned, with the strike threats coming during one of Ryanair’s busiest months when the Irish airline expects to carry in the region of 13 million passengers.

With that in mind, talks are planned in a bid to avert the action. O’Leary might sit this one out though, having only recently said pilots “do not have a difficult job”; are “precious about themselves” and “full of their own self-importance”.

Things didn’t get off to a great start either, with a row over where the meeting should take place holding matters up. Ryanair wants to meet in its headquarters in Swords, close to Dublin Airport, while Ialpa wants a neutral venue.

Separately, Margrethe Vestager, the EU competition commissioner, is investigating whether Ryanair received illegal state aid from regional and local authorities in France.

According to Vestager, best known in these parts for ordering the State to recoup €13 billion in back taxes from Apple, Ryanair received substantial payments from a tourism body for promoting Montpellier as a visitor destination on its website. Ryanair has rejected the allegation.

Brexit woes

Most of the Brexit-related focus to date has been on the likely damage facing Irish exporters when Britain finally takes its leave, but a new report this week suggested that the carnage might not end there.

The study, conducted by economists John FitzGerald and Edgar Morgenroth for the Irish Institute of European Affairs (IIEA), examined the impact of Brexit on Irish imports.

It found that the Republic’s grocery sector could be the hardest hit with more than two-thirds of products on Irish supermarket shelves either manufactured in the UK or imported through Britain. It suggested customs checks would be “extremely disruptive”.

So it’s just as well things have stabilised economically. Another surge in corporation tax receipts in the first-half of 2018 has put the Government on course to exceed its budgetary targets for the year.

The concern about the State’s reliance on corporate tax has been flagged again and again. Exchequer figures for the first half of the year show it accounted for 16 per cent of our total tax take with a record €4 billion, some 9.1 per cent above target.

About 40 per cent of the revenue generated from corporation tax here comes from just 10 companies. It is understood these include tech giants Apple, Microsoft, Dell, Google and Oracle.

Overall, the exchequer figures show the Government collected just under €25 billion in taxes in the first half of this year, which was 5 per cent up year on year and more than €168 million ahead of target.

Elsewhere, the latest Live Register figures showed the number claiming benefits fell to a 10-year low in June. Separate figures from the CSO showed the official jobless rate fell to a post-crash low of 5.1 per cent.

Growth in both the Republic’s services and manufacturing sectors rose to five-month highs, according to Investec. It was just consumer confidence that spoiled the party, falling to its weakest level in 13 months over global political uncertainty.

Meanwhile, the “living wage”, a non-statutory pay rate set by a group of researchers and academics, has been increased by 20 cent an hour to €11.90 to reflect the rising cost of rental accommodation in Dublin and other urban areas.

Housing crisis

There are still major problems in the State’s housing market. The European Commission this week warned in its latest post-programme surveillance report that the shortage of housing supply and the significant increases in property prices are posing a major risk to the Irish economy.

It said the introduction of rent pressure zones has been ineffective and contributed “little to containing price rises”. Rental inflation was “well above” the 4 per cent prescribed by the rent pressure zones.

A separate report from Myhome.ie, which is owned by The Irish Times, and stockbroker Davy, said Central Bank of Ireland lending limits were cooling the rate at which house prices are rising.

The report, which concerned the second quarter of 2018, said the median asking price for new homes nationally is now €270,000, while in Dublin it has reached €384, 000. Prices rose 7.2 per cent in the year, the slowest rate of inflation in two years.

The supply issues in the market auger well for builders, who are already cleaning up. Turnover in the industry’s top 50 companies rose 12 per cent to €6.72 billion over the past year, according to Construction Magazine.

One, Bovale, is selling a site in Kilcock, Co Kildare, with the capacity for 400 new homes, to residential developer Glenveagh Properties in a deal thought to be worth more than €20 million.

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