Despite making concessions to unions over the past few months, Ryanair CEO Michael O'Leary doesn't intend to give in to all their demands. The carrier and its disgruntled staff are locked in a drawn out game of chicken.
Ryanair Holdings Plc flights from Germany to Athens, the Spanish costas and Latvia were among 150 canceled on Wednesday as pilots and cabin crew walked out as part of a year-long campaign for higher pay and improved contracts.
The Frankfurt airport website listed as deleted Ryanair operations to the Greek capital, Porto in northern Portugal and the Spanish holiday hot-spots of Malaga, Seville, Lanzarote and Murcia. In Cologne, 20 of 56 slated services were rubbed from the timetable, while in Bremen a trip to Riga was among those lost.
Europe’s biggest discount airline has been forced to scrap more than a third of its 400-plus daily flights in Germany after unions there called a strike late Monday. Among the majority of departures due to operate as normal were trips from Frankfurt to London Stansted, Ryanair’s biggest base, and Majorca.
Chief Executive Officer Michael O’Leary told a U.K. press conference that he won’t “roll over” in the face of unreasonable demands, while pledging to work to avoid walkouts wherever possible. While public concern about the strikes is hurting demand and fares, the CEO reiterated guidance for full-year net income between 1.25 billion euros and 1.35 billion euros ($1.4b billion-1.6 billion).
Ryanair shares traded 0.4 percent higher at 11:56 a.m. in Dublin after the outlook comments, having previously declined as much as 0.6 percent.
Services staffed by contract pilots are unaffected by the German walkouts, together with operations that use planes based outside the country. The company’s newly acquired Laudamotion arm, which is headquartered in Austria but has a major business in Germany, isn’t involved in the dispute.
Dublin-based Ryanair, which has made progress in talks elsewhere including deals with Italian and Irish pilots, said Tuesday a failure to reach a realistic settlement in Germany could lead to base closures and job cuts, especially at smaller hubs that lose money in the winter low season.
Ryanair says it has a 10 percent market share in Germany and that a pay deal preserving its cut-price business model would allow it to pursue plans to lift that to 20 percent. The airline currently has 11 bases in Europe’s largest economy, including Berlin Schoenefeld, Hamburg and Dusseldorf.
All told, Ryanair has reached recognition agreements with about 60 percent of pilot and flight-attendant unions in the markets where it operates, according to a note from Morgan Stanley. The dispute began after a rostering foul up increased staff bargaining power, triggering a campaign for unionization.
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Photo credit: Ryanair CEO Michael O'Leary. The airline has had to cancel some flights from Germany. Bloomberg