Ryanair Hits Out at Striking Workers With Irish Fleet Cuts

(Bloomberg) -- Ryanair Holdings Plc is pulling a fifth of its planes from its Dublin base this winter as the budget carrier moves to counter intensifying labor unrest that’s causing widespread European flight disruptions.

The airline said Wednesday it’ll cut its Irish fleet to 24 aircraft from 30, blaming pilot walkouts for hurting bookings, fares and consumer confidence, and that letters have been sent informing more than 100 pilots and 200 cabin crew that their services may not be needed from Oct. 28.

Irish union Forsa called the move “provocative” and announced a fourth day of pilot strikes in the country on Aug. 3.

The characteristically aggressive stance in Ryanair’s battle with trade unions comes as the most disruptive action the airline has faced gets underway with cabin crew across Europe staging walkouts. More than 600 flights have been canceled this week, the airline said, amid strikes in Spain, Portugal, Belgium, Italy and Ireland at the height of the summer travel season.

The strife shows how the carrier -- which refused to recognize unions for three decades as it disrupted the industry with a low-fare, no-frills model -- is now facing the same pressures as traditional airlines. It agreed to accept unionization in the face of a staffing crunch last year.

Shares Gain

Ryanair shares rose as much as 4.3 percent in a sign that investors back Chief Executive Officer Michael O’Leary’s bid to undercut the union-led action. While the discount giant had already said it wouldn’t submit to “unreasonable demands,” the planned Irish cuts were also greeted with a note of caution.

“Antagonizing the workforce in the context of labor disputes is a very risky strategy,” Bernstein analyst Daniel Roeska wrote. The move “will likely lead to greater union membership and higher strike participation,” as well as a push for guarantees on aircraft and employment levels “fundamentally at odds with what Ryanair wants to achieve,” he said.

Forsa said that further strikes will follow unless Ryanair negotiates “in good faith,” while adding that it’s not clear whether the planned Irish groundings represent a significant change in practice since the airline typically idles a number of planes each winter as demand declines. Ryanair didn’t respond to requests for comment on how the new plan compares with previous reductions.

Earnings Impact

The conflict is starting to weigh on earnings, with the company posting a 20 percent drop in first-quarter profit on Monday. Passenger wariness about booking fed a drop in prices, just as fuel cost rose and the Irish carrier shelled out for a 20 percent pay increase already granted to pilots.

Wednesday’s disruption may be worse than expected since Ryanair didn’t plan for cancellations in Italy where it has signed recognition agreements with some unions, said Liz Blackshaw, campaigns director of the International Transport Workers’ Federation. As many as 14 flights from Pisa were canceled, according to the airport website, with departures from Rome, Milan and Venice also affected. Ryanair didn’t immediately comment.

Germany’s Vereinigung Cockpit pilot union is also holding a vote on possible strike action, with the outcome due later this month.

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