Winning formula up in the air as workers strike back

After a shaky start in 1986 Ryanair has risen from being a small private airline to become Ireland's leading low-cost carrier.

It provides more daily flights to London than Aer Lingus, and its public flotation last May made a multi-millionaire of its chief executive, Michael O'Leary.

The company's first strike yesterday, by some of its lowest-paid employees, is an unwelcome hiccup in that triumphal progress.

But the dispute is also widely regarded as a test of strength between the country's largest union, SIPTU, and one of its most aggressively anti-union companies.

The very success of Ryanair and its ability in seeing off previous attempts by the AEEU and ATGWU to represent workers have symbolised the relative impotence of trade unions in dealing with some of the Celtic Tiger's more ferocious cubs.

To some extent Ryanair is a victim of its own success. It created a winning business formula by providing a no-frills, low-cost service for air travellers. It has done so by keeping its cost base well below that of Aer Lingus.

After years of job-shedding, Aer Lingus still employs around 5,000 people, compared to 950 in Ryanair. Wage rates are also significantly higher at the State airline, and the management of change has been slow.

Aer Lingus executives sometimes cast a wistful eye at their rival and envy it the freedom a union-free environment provides for rapid adjustment to changing market conditions.

Ryanair has made no secret of its antiunion stance since it succeeded in defeating the first effort to unionise its employees in the early 1990s.

The Amalagamated Engineering and Electrical Union sought to represent eight craftworkers and served strike notice for a Monday.

To widen the dispute and minimise the pressure on the strikers, the AEEU also persuaded the ICTU executive to hold a special meeting the previous Sunday and grant it an all-out picket. In spite of this all the craftworkers reported for work next morning. Senior Ryanair managers contacted each of them at their homes over the weekend and persuaded them to abandon the strike.

That tactic does not appear to have worked this time, perhaps because the company is no longer struggling to survive and some employees no longer see themselves primarily as part of the Ryanair "team".

In the past, the company has convinced employees that extra effort for less pay than their counterparts in Aer Lingus would lead to bigger long-term benefits. But when last May's public flotation of Ryanair made more than £64 million for the Ryan family and a multi-millionaire out of Michael O'Leary, only a modest and restrictive profit-sharing scheme was introduced for ordinary employees.

The flotation document also revealed that three executive directors, including O'Leary, had received £24 million from profit bonus schemes. A SIPTU branch secretary, Paul O'Sullivan, who had been quietly recruiting members in Ryanair for some time, issued a press release saying that O'Leary's bonus for the year ending March 1997 alone was the equivalent of an extra £14,000 for every company employee.

The ATGWU also had members in Ryanair and decided to serve strike notice on behalf of baggage-handlers. The company responded quickly, saying O'Leary had turned the company's fortunes around and saved it from possible extinction in the early 1990s.

However, it also decided to buy off potential industrial unrest by introducing pay rises worth 15 per cent over three years to its staff. The baggage-handlers, who continued to threaten strike action, received 27 per cent. Throughout the negotiations, Ryanair maintained its traditional stance of refusing to talk to the union, and all communications were with the workers themselves.

Later the ATGWU handlers claimed management had promised to keep pay rates above those of baggage-handlers in Servisair, which services other airlines at Dublin Airport. When SIPTU won a significant pay rise from Servisair last autumn, which brought them almost into line with Aer Lingus, Ryanair handlers in SIPTU asked the union to negotiate on their behalf. With profits up 36 per cent to £96.9 million for the six months to the end of September, and its baggage-handlers earning around £2,400 a year less than those in Aer Lingus, the company can obviously afford to negotiate on pay with SIPTU. But for the moment the company is maintaining its no-frills policy that continues to include no trade unions.