The Malaysian Reserve

Ryanair sees Irish fleet cuts for winter this year

A Ryanair Boeing 737 pictured at Dublin Airport today 12 July 2018. Irish Ryanair pilots are striking today. Photograph: Aidan Crawley/Bloomberg

By BLOOMBERG

LONDON • Ryanair Holdings plc is pulling a fifth of its planes from its Dublin base this winter as the budget carrier moves to counter intensifying labour unrest that’s causing widespread European flight disruptions.

The airline said yesterday it’ll cut its Irish fleet to 24 aircraft from 30 for winter 2018, blaming pilot walkouts for hurting bookings, air fares and consumer confidence in Irish flight schedules.

It said it has sent letters informing more than 100 pilots and 200 cabin crew that their services may not be needed from Oct 28.

Ryanair’s characteristically aggressive stance in its battle with trade unions comes just as the most disruptive strikes that the airline has yet faced get underway in mainland Europe.

More than 600 flights have been cancelled this week amid walkouts in Spain, Portugal, Belgium, Italy and Ireland, at the height of Europe’s busiest summer travel season.

The strife shows how the carrier, built on a strategy of low fares and no frills, is now facing the same cost pressures as traditional airlines from rising salaries and benefits.

Ryanair’s shares rose as much as 4.3% in response to the Dublin fleet cut plan, a sign that investors stand behind CEO Michael O’Leary’s attempt to undercut the union-led action.

While the discount giant has already said it won’t submit to “unreasonable demands”, the planned cutback in Ireland was also greeted with a note of caution.

“Antagonising the workforce in the context of labour disputes is a very risky strategy,” Bernstein analyst Daniel Roeska wrote.

The move “will likely lead to greater union membership and higher strike participation, effectively increasing the union’s bargaining power”.

The threat of moving aircraft out of airports and job losses will likely lead unions to push for a minimum level of guaranteed aircraft and employment, which are “fundamentally at odds with what Ryanair wants to achieve”.

The major industrial action comes after the budget carrier agreed to accept unionisation in the face of a staffing crunch last year.

By buckling under pressure from disgruntled pilots, O’Leary — who once said “hell would freeze over” before Ryanair unionised — acknowledged the intensity of pressure put on the airline.

The CEO had pledged higher pay and bonuses to keep flight-deck crews from bolting to rivals and also threatened them with retaliatory measures if they went on strike.

The conflict is starting to weigh on earnings, with the company posting a 20% drop in first-quarter profit on Monday.

Hesitation on the part of customers to book fed into a drop in prices, just as fuel costs are rising and the Irish carrier shelled out for a 20% pay increase already granted to pilots.

Irish pilots — who have so far held three one-day strikes — were due to decide yesterday whether to announce further walkouts, while Germany’s Vereinigung Cockpit pilot union is also holding a vote on possible strike action, with the outcome due later this month.