Ryanair’s decision to recognize unions came out of the blue.

The Irish airline’s struggles last year made a deal with its employees more likely but it was still a big switch in company policy.

While it is still too early to declare the end of hostilities – Chief Executive Michael O’Leary recently said he would face down any further disruption – the situation is still a marked improvement.

However, better relations with its staff come at a price. Ryanair said in its third quarter results that pilot pay increases of up to 20% and a rise in crewing ratios will cost an extra $55 million (€45 million). In 2019 the figure will rise to $123 million (€100 million).

It’s not all bad news for the airline though.

When asked at a Q&A after the results, O’Leary said there were “not many” benefits to unionization before adding that it would allow the airline to boost its presence in certain markets.

“The principle benefit [of unionization] is we’re now free to enter into those markets like France, like Scandinavia, where previously we would avoid establishing bases, or in fact closed bases, like Marseille and Riga because of the threat of unionization being imposed on us,” he said.

“Now that we’ve voluntarily agreed to unionization we are looking, and in active discussions with those airports about establishing bases in those countries, where we can provide [a] much lower fare alternative to the incumbent carriers, like EasyJet and Air France in France and Norwegian and SAS – two very high-fare carriers – in Scandinavian countries.”

Along with happier employees, maybe unionization will end up helping the airline reach its target of carrying 200 million passengers per year by 2024.

Third Quarter Results

In the three months to the end of December 31, Ryanair’s revenue rose 4 percent to $1.7 billion (€1.4 billion). Profit before tax was up 6 percent to $151 million (€122.9 million).

Photo Credit: An image of Ryanair cabin crew from its media site. Ryanair has agreed to recognize labor unions, despite promises in the past not to. Ryanair