Wednesday 15 August 2018

Ryanair warns of low-cost model risk

A Ryanair airplane takes off from the airport in Palma de Mallorca, Spain. Stock photo: REUTERS
A Ryanair airplane takes off from the airport in Palma de Mallorca, Spain. Stock photo: REUTERS
John Mulligan

John Mulligan

Ryanair has warned its shareholders that its entire low-cost business model could be threatened by demands from pilots.

It sounded the warning in its annual report as it continues to face industrial unrest by pilots and cabin crew. It said that if staff continue to push for agreements, this could decrease the productivity of pilots, increase costs and have an adverse effect on the airline's profitability.

"Ryanair intends to retain its low-fare, high-people productivity model," it stated in the report. "However, there may be periods of labour unrest as unions challenge the existing high-productivity model which may have an adverse effect on sentiment and profitability."

The annual report outlines for investors Ryanair's own approach to the current industrial relations situation. The airline agreed last December to recognise unions in a dramatic move that followed a pilot rostering crisis during September.

"While Ryanair makes the transition to collective bargaining with unions, these unions may have unrealistic expectations and agitate for unproductive work practices. Ryanair believes that existing terms and conditions for both pilots and cabin crew are already extremely competitive in the market with competitive pay, fixed rosters, outstanding promotional opportunities and a wide choice of base locations."

Ryanair staff in some countries have been pushing to secure contracts of employment based on local, rather than Irish law. Last September, the European Court of Justice ruled in a case related to six Belgium-based Ryanair workers, that a jurisdiction clause that sought to prevent them from bringing proceedings before courts which do have jurisdiction under EU legislation in the air passenger transport sector, was not enforceable against those employees.

The ruling effectively meant that Ryanair crew can have disputes regarding employment contracts held in the country where they habitually carry out their work, such as a Ryanair base, rather than in Ireland, the country under which the contracts are drafted.

Irish Independent

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