Ryanair Union Rout Has Silver Lining With First French Hubs
(Bloomberg) -- Ryanair Holdings Plc’s costly acceptance of trade unions is proving to have a bright side: the budget carrier aims to open two bases in France, where its hard-line labor policies have allowed only a limited presence.
Ryanair aims to station five jets at each of the hubs, according to Chief Commercial Officer David O’Brien, who said Tuesday that the Irish company has met with representatives of airports in Nantes, Bordeaux, Marseille, Lyon and Toulouse. Talks on recognizing French labor groups are ongoing.
Unionization was forced on Ryanair following a rostering glitch that gave its pilots unprecedented bargaining power. The grudging move means the annual wage bill will jump by an estimated 100 million euros ($123 million), but also makes it easier for the Dublin-based discount giant to penetrate airports in markets where companies are required to let workers organize.
While Ryanair has served France for years, the carrier has done so with aircraft stationed elsewhere, and has never been able to establish the permanent bases and local employee structures that have served as a springboard to dominance in other countries. Markets including Scandinavia may also now open up, RBC Capital Markets analyst Damian Brewer has said.
Speaking in Madrid alongside O’Brien, Chief Executive Officer Michael O’Leary said the outcome of unionization talks in Ireland, Germany, Belgium, Italy and Spain won’t hold back growth.
O’Leary last week said that Ryanair will resist buckling to unreasonable union demands. The carrier has so far reached a recognition deal with British pilots accounting for about a quarter of its flight-deck crew.
Ryanair said it was forced to cut prices for flights to Catalonia by as much as 30 percent because of the political crisis in the region, and that tickets are still selling for less. “Fares are significantly lower this summer than they were last year,” O’Brien said.
The carrier still aims to add 29 Spanish routes next winter and sees traffic there expanding 9 percent over the coming year.
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