Union recognition is a big deal for Ryanair given its previous stance. The move will no doubt embolden the company’s employees, who could push for further concessions.
Ryanair Holdings Plc buckled under pressure from disgruntled pilots and agreed to recognize labor unions in an eleventh-hour move by Europe’s biggest budget airline to avert its first-ever strike set to begin in Italy.
The Irish company said Friday it has written to pilot organizations in Ireland, the U.K., Germany, Italy, Spain and Portugal, inviting each of them to talks. The carrier will “recognize these unions as the representative body for pilots in Ryanair in each of these countries.”
Ryanair’s about-turn on its longstanding anti-union stance comes after Chief Executive Officer Michael O’Leary repeatedly fought attempts by the groups to gain representation. He has said “Hell would freeze over” before Ryanair is unionized. The abrupt reversal was prompted by intensifying pressure in the past weeks from European pilot unions threatening labor action during the busy holiday travel season.
“There is always a time for change,” said Edward Wilson, chief people officer at Ryanair. “If we need to change, we do it. If unionization is what we need to do not to have disruptions for our customers then we’re going to do it.”
In response, Italian union Fit-Cisl said it’s maintaining a four-hour walkout scheduled to begin at 1 p.m. local time that would be the carrier’s first-ever strike and one that was set to kick off a series of disruptions in other European countries.
Members of the Irish Airline Pilots’ Association told the carrier this week that they’ll halt work for a day on Dec. 20 over Ryanair’s refusal to recognize labor groups, while Vereinigung Cockpit, which represents flight-deck crews in Germany, said Ryanair pilots based there planned stoppages “at any time,” though they declined to specify a date.
A spokesman for Ireland’s Impact Union, which includes the pilots’ association, said Friday it would respond to Ryanair after studying the proposal.
“This dramatic change in policy has been made to avoid widespread industrial action and disruption to service over the Christmas period,” Investec analyst Alex Paterson wrote in a note. The move raises the possibility that more staff at the company will also become unionized and that improved pay and conditions for pilots will “at least partially” erode the airline’s cost advantage over time.
Ryanair shares fell 1.4 percent to 16.17 euros at 10:02 a.m. in Dublin, giving a market value of 19 billion euros ($22 billion).
Ryanair said the unions will be recognized so long as they establish committees of its pilots to deal with issues relating to the company. Its statement also said that there will be no engagement with pilots who fly for competitor airlines and called on crews to call off planned walkouts.
“Ryanair will now change its longstanding policy of not recognizing unions in order to avoid any threat of disruption to its customers and its flights from pilot unions during Christmas week,” the company said.
©2017 Bloomberg L.P.
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Photo credit: A Ryanair aircraft. The carrier has finally decided to recognize unions as it looks to avert strike action. Chris Ratcliffe / Bloomberg