Ryanair Plans Hundreds of Job Cuts to Counter Brexit, Max Delays

(Bloomberg) -- Ryanair Holdings Plc is poised for one of the deepest rounds of job cuts in years as Europe’s biggest budget airline responds to falling earnings and the grounding of Boeing Co.’s 737 Max jetliner.

In a video message to staff seen by Bloomberg, Chief Executive Officer Michael O’Leary said the carrier has an excess of more than 500 pilots and about 400 flight attendants. On top of that it will need around 600 fewer people in those categories next summer than it had envisaged before the Max’s idling.

A spokesman for Dublin-based Ryanair confirmed the video’s authenticity and said about 900 current staff could be affected. The carrier had about 5,500 pilot posts as of March, of which about 10% appear to be at risk based on O’Leary’s comments. The carrier employs just over 9,000 flight attendants.

“We over the next couple of weeks will be doing our very best to minimize job losses, but some are unavoidable at this time,” O’Leary said.

Ryanair had already warned it would close some European bases and shrink others in response to the Max crisis and concerns around Brexit. Boeing Co.’s 737 Max was grounded following two fatal accidents and there’s no firm date when regulators will allow the resumption of flights.

The cuts will test Ryanair’s ability to offload staff after O’Leary agreed to recognize unions at the end of 2017. The CEO had previously warned that an organized workforce would impinge on the flexibility needed to quickly respond to shifts in the market.

The airline posted the video Monday after announcing a 21% drop in quarterly earnings hurt by higher fuel costs, faltering economies and a fare war. In the address, an apologetic O’Leary tells staff that redundancies will be detailed by the end of August once the carrier -- which has a total of 86 bases across Europe -- has engaged with airports and unions. The cuts will be enforced in September and October and again after Christmas, he added.

Shares of Ryanair, Europe’s biggest discount airline with more than 150 million passengers a year, closed 1.9% higher in Dublin.

The level of excess staff is in part due to a reduced level of employee churn, which the CEO described as having “dried up to effectively zero” in the wake of improved pay deals triggered by the unionization drive.

Strike Ballots

News of the cuts comes as Ryanair’s British and Irish pilot unions ballot members on strike action, and with the carrier’s Portuguese cabin crew planning to walk out in August. Travelers have endured some of Europe’s worst disruption for years this summer, with widespread delays and cancellations from overcrowded skies, baggage-system breakdowns and extreme weather conditions. British Airways may face its first pilot strike for four decades after losing a court bid to block walkouts on Wednesday.

Ryanair indicated on July 16 that it would trim operations, saying it expected to get no more than 30 of the 58 Max jets due from Boeing by next summer, delaying planned fleet expansion. The upgraded version of the 737 workhorse was idled and deliveries halted following the crashes off the coast of Indonesia and in Ethiopia within less than five months of each other that killed a combined 346 people.

The U.S. manufacturer is striving to return the plane to service before the end of 2019, though carriers have begun to eliminate it from their timetables into the new year.

To contact the reporters on this story: Ellen Milligan in London at emilligan11@bloomberg.net;Benjamin Katz in London at bkatz38@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net, Christopher Jasper, Tara Patel

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