Ryanair Says German Jobs at Risk as Strike to Ground 150 Flights

(Bloomberg) -- Ryanair Holdings Plc threatened to cut bases and jobs in Germany after pilots and cabin crew there said they would strike on Wednesday, forcing it to cancel 150 services.

The Irish discount giant said Tuesday that its smaller bases in Europe’s largest economy -- where it has around 400 daily flights -- are especially at risk of being shut down, since they fail to make money in the winter low season.

While Ryanair has made progress in negotiations elsewhere, sealing deals with Italian and Irish pilots, unions in Germany said Monday that talks on pay and contracts had failed to produce an agreement. The company, which relies on a low cost base for its cut-price operating model, has been wrangling with staff for a year after a rostering foul up increased their bargaining power.

“We want a stable collective labor agreement,” Chief Operations Officer Peter Bellew said at a briefing in Frankfurt. “If we can’t achieve that it’s going to be difficult to maintain our normal business in Germany.” Ryanair says it has a market share of 9 or 10 percent in the country and that a deal with unions would allow it to pursue plans to increase that figure to 20 percent.

Services staffed by contract pilots will be unaffected by the strike, together with operations that use planes based outside the country. The last walkout in Germany on Aug. 10, which also involved pilots in four other countries, led to the cancellation of more than 400 flights.

‘Deadlock’

Though Ryanair recognized Germany’s Ver.di union in July, the labor group says two rounds of talks on higher pay and minimum salaries produced no result and called on its 1,000 cabin crew at the carrier to walk out. Vereinigung Cockpit, representing pilots, said months of negotiations had led to “deadlock.”

All told, the Dublin-based company has reached recognition agreements with about 60 percent of pilot and flight-attendant unions in the markets where it operates, according to a note from Morgan Stanley. Kenny Jacobs, Ryanair’s marketing chief, described the latest German action as a “wild-cat strike” and “not good for anyone.”

Ryanair signed its first-ever union contract with pilots in Italy last month and on Wednesday won approval for a deal with aviators in Ireland, one of its biggest bases. At the same time, cabin crew from Spain, Italy, Portugal and Belgium last week agreed to stage a further walkout later this month.

Vereinigung Cockpit said it had proposed that the parties go to arbitration to help reach a deal, something that led to a breakthrough in talks between Ryanair and its Irish pilots. The airline said in a statement that it had offered mediation using the same go between, Kieran Mulvey, and that there is no difference in Germany between the two processes.

Ryanair made comments about eliminating jobs during the dispute in its home market, saying as many as 300 pilots and flight attendants in Dublin might need to relocate to Poland or risk losing their positions. After an agreement was reached the threat was dropped and Chief Executive Officer Michael O’Leary said six aircraft would be reinstated at the Irish base.

Shares of Ryanair were trading 0.8 percent lower at 13.10 euros as of 2:05 p.m. in Dublin after falling for eight consecutive trading days through Monday.

Separately, the budget airline said it would bar press from its annual investor meeting on Sept. 20 “to allow shareholders to discuss all matters freely with the board without these discussions being distorted for PR purposes.”

--With assistance from Áine Quinn.

To contact the reporters on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.net;Richard Weiss in Frankfurt at rweiss5@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, ;Anthony Palazzo at apalazzo@bloomberg.net, Christopher Jasper, Andrew Noël

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