Ryanair to hold its first ever meeting with union today
Dispute fuels investor uncertainty, clipping €600m off value
Ryanair’s share price closed down 2.1% at €14.61 in Dublin on Monday. Photograph: EPA
Ryanair has agreed to release pilots’ representatives from their duties today to allow them take part in its first meeting with their trade union Impact in a move that guarantees that Wednesday’s threatened strike will not go ahead.
The airline pledged to recognise pilots’ unions across Europe in a dramatic U-turn on its policy on labour organisations in a bid to fend off strikes this week, including one at the Republic’s airports.
Late on Monday, Ryanair confirmed to Impact that it would meet the union at a neutral venue later today and that it would agree to release a number of named pilots’ representatives from their duties to allow them to take part.
Impact had said that it would suspend a strike scheduled for Wednesday at Dublin, Cork and Shannon airports by members in Ryanair if the airline accepted its invitation to meet on Tuesday and released the pilots’ representatives.
The move means that the strike at the three Irish airports by members of the Irish Airline Pilots’ Association – which is part of Impact – will not now go ahead.
Impact’s representatives at the meeting will include official Angela Kirk.
Ryanair’s chief people officer Eddie Wilson and its recently appointed chief operations officer Peter Bellew are thought likely to represent the airline.
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Meanwhile, German pilots’ union Vereinigung Cockpit (VC) has yet to withdraw its threat to strike “at any time” up to Saturday, December 23rd, pending the outcome of a meeting with the carrier’s management on Wednesday.
Its director of international affairs, James Phillips, confirmed that the meeting was due to go ahead on Wednesday and said that the union’s ultimate aim was to get Ryanair to agree a contract for pilots in Germany.
“We are going to meet with them and talk,” he said. “If they are playing games they can expect a cold winter.”
There were no further developments yesterday on the efforts of the International Transport Workers’ Federation to win recognition for Ryanair’s 8,000 cabin crew.
The federation has written to Ryanair on behalf of several European unions whose members include the airline’s cabin crew.
The company signalled last week that it would consider recognising these workers’ representatives should they approach the company.
Ryanair’s share price closed down 2.1 per cent at €14.61 in Dublin on Monday, knocking close to €600 million off its value, as investors continued to weigh the likely impact of unionisation on profits.
Market watchers said that unionisation would bring its long-term performance closer to that of Southwest Airlines in the US, whose profit margins are in the region of 10 per cent compared with Ryanair’s 20 per cent.
Southwest’s growth has been slower than the Irish airline’s in recent years, but it is the biggest carrier in the US with more than 120 million passengers a year.
David Holohan, chief investment officer with Merrion Capital, pointed out that unionisation always leads to some level of cost increases. “It’s a question of do fares need to go up to counter higher labour costs,” he pointed out.
Mr Holohan argued that with labour costs per passenger of €4, less than half its nearest rival, the Irish airline had more scope to deal with the impact of unionisation than its peers.
Stephen Furlong, analyst at Dublin stockbrokers Davy cut the firm’s price target for Ryanair to €17 from €20. In note released on Monday, he said that the airline’s management should still build the business to 200 million passengers annually on 600 aircraft by 2024.
Mr Furlong noted that where returns from the business settled would ultimately determine Ryanair’s share price.