Ryanair has announced that talks between its management and the trade union representing its 5,500 pilots have broken down. Ryanair’s pilots, who are reported to be earning an average of €172,000 pa (US$191,000 at the time of writing), are claiming a 101% pay rise. As the talks are faltering, the pilots are threatening strike action for August 22nd – 23rd. What are the impacts of all of this for Ryanair and its passengers, bearing in mind that Ryanair's British pilots have also voted for strike action?
Ryanair’s point of view
Ryanair’s media section put out a statement overnight to say that the talks had broken down and no progress had been made. The pilots are represented by the Trade Union Forsa. Ryanair’s Chief People Officer Eddie Wilson said that the pilots’ demands are grossly unreasonable and unimplementable. Wilson also said the now the pilots are threatening to disrupt the holiday travel plans of thousands of customers over the coming weeks.
Wilson also pointed out that, just yesterday, Norwegian announced the closure of its Dublin operations and that Ryanair has more than 500 pilots surplus to requirements because of the delays to the delivery of more than 30 Boeing 737 MAX aircraft. Wilson added that it is just 10 weeks to go before a no-deal Brexit that could cause further disruption to air travel and airline jobs.
The Pilots’ view
World Airline News has reported that 94% of the Ireland-based, directly-employed Ryanair pilots who were eligible to vote, voted for strike action. The strike would be effective for 48 hours from 00.01am on Thursday 22nd August. The pilots’ union served strike notice on the company and added that Ryanair pilots would notify the company of further strike days in due course.
Only 180 of the 5,500 Ryanair pilots were eligible to vote, however. Other pilots cannot be balloted under Irish employment law as they are employed by agencies or have self-employed status.
Forsa said that the Irish Airline Pilots’ Association (IALPA) had submitted a 30-page proposal to Ryanair management in March of this year but that Ryanair had not responded to it.
IALPA’s view is that it is seeking pay levels it believes are common and competitive in the commercial airline sector.
The Union, Forsa
Fórsa was formed on 2nd January 2018 and has over 80,000 members and it represents members in the public service, as well as the commercial sector, state agencies, some private companies and in the community and voluntary sector.
Fórsa was formed following the amalgamation of the Civil, Public and Services Union and the Public Service Executive Union. Fórsa is the second-largest union on the island of Ireland and by far the largest trade union voice in the Irish civil and public service.
UK Ryanair pilots have also voted to strike, and there is a possibility that they will be joined by Spanish pilots too.
The UK connection
The Independent newspaper reports that British pilots employed by Ryanair are also due to walk out on 2nd, 3rd and 4th September. The British pilots will also join in the strike being mounted by their Irish colleagues on 22nd and 23rd August. The British pilots employed by Ryanair, who belong to the British Airline Pilots’ Association (Balpa), are also in dispute with Europe’s biggest budget carrier on a range of issues from pensions to maternity benefits and voted heavily in favor of the strike action.
How will services suffer?
If the strike goes ahead, we can generally set out the potential for disruption.
Firstly, who will book a flight anywhere around 22nd – 23rd August with Ryanair, knowing that disruption is possible/likely? If you have already booked a flight for those dates, are you considering changing the booking?
The following data shows the important metrics, as supplied by Ryanair:
- 2400 daily flights
- 38 countries
- 224 airports
- 1800 routes
- 475 planes
Of course, this must be a blow to Ryanair who has seen an average of 10.5% growth in August over the last three years and August is its peak period for an average of around 410,000 passengers per day, representing a load factor of 97%.
For the September action, the story is similar to August with high passenger numbers and high load factors.
Impact on Ryanair stock prices?
On the NASDAQ on 15/2/2019 Ryanair’s stock price was US$72.32 per share, yesterday, 14/8/2019, it was US$58.38 per share
On the LSE on 15/2/2019 the price of a share was €11.84, yesterday, 14/8/2019, it was €8.76 per share
Finally
It looks as if Ryanair had some idea that this possible problem was in the offing when it wrote in its 2019 Annual Report:
As of March 31, 2019, over 99% of Ryanair pilots have already accepted an updated pay deal but there is still the potential for claims from unions to increase pay over and above what has already been agreed. There may be a push for legacy type working conditions which if acceded to could decrease the productivity of pilots, increase costs and have an adverse effect on profitability.