As profits slump at carrier...
Ryanair refuses pilot demands and forecasts airline failures
Ryanair: will not concede to ‘unreasonable demands’
Ryanair has hit back as more strikes are planned and said it expects rising costs to lead to more airline failures mergers.
The Irish carrier insisted it would not concede to “unreasonable demands” from pilots who plan another walk-out from tomorrow.
It has also warned that in the event of no deal being struck on Brexit the company may be forced to restrict the rights of its UK shareholders.
Announcing a 20% fall in pre-tax profits to €345.4m in the first quarter, Ryanair said European airlines are “suffering a significant cash flow squeeze and/or are close to breaching debt covenants”.
The carrier added: “We expect this will lead to further airline failures and consolidation this winter, which will provide growth opportunities, hopefully at stronger yields for Ryanair’s low fares/low cost model. ”
It blamed the drop in profits on lower fares, the absence of half of Easter in the quarter, higher fuel prices and higher pilot costs.
Fuel prices have risen substantially in the three months to 30 June compared to the same period last year and while it is hedged on some of the costs, the company will see see its full year fuel bill increase by at least €430m.
It said its staff costs rose by 34% “primarily due to pilot 20% pay increases”.
Pilots at Ryanair have been on strike over pay and conditions, forcing the airline to cancel flights.
The company said that in recent months it had implemented a series of initiatives to make Ryanair more attractive to pilots and cabin crew, including a 20% pay increase “which makes our pilots significantly better paid than competitor (Norwegian & Jet2) B737 pilots”
It had also cut training/bonding costs for new pilot and cabin crew recruits; facilitated over 700 pilot transfers to their preferred base; and invested heavily in new simulators and in house training capacity. It also announced it would recognise trade unions.
“We suffered tw unnecessary strikes by a small minority (25%) of Irish based pilots in July (with a third strike threatened for 24 July). Cabin crew have also threatened strikes in Spain, Portugal, and Belgium on 25 & 26 July.
“We have minimised the impact of these strikes on customers by cancelling a small proportion of our flight schedule, well in advance of the day of travel, to allow our customers to switch flights or apply for full refunds.
“While we continue to actively engage with pilot and cabin crew unions across Europe, we expect further strikes over the peak summer period as we are not prepared to concede to unreasonable demands that will compromise either our low fares or our highly efficient model.”
The company said it remains concerned by the danger of a hard (“no-deal”) Brexit in March 2019.
“Recent events in the UK political sphere have added to this uncertainty, and we believe that the risk of a hard Brexit is being underestimated,” said the company.
“It is likely that in the event of a hard Brexit our UK shareholders will be treated as non-EU. We may be forced to restrict the voting rights of all non-EU shareholders in the event of a hard Brexit, to ensure that Ryanair remains majority owned and controlled by EU shareholders.”