Hargreaves Lansdown

Ryanair CEO O'Leary offers pilots improved pay and conditions

Fri 06 October 2017 08:41 | A A A

No recommendation

No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.

(ShareCast News) - Ryanair chief executive Michael O'Leary penned an impassioned letter to the budget airline's pilots to offer better pay and conditions in a bid to stave off a potential exodus that could lead to further flight cancellations.

The plea came just two weeks after O'Leary accused his pilots of crying over spilt milk and being "full of their own self-importance" after the airline was forced to cancel thousands of flights in recent weeks due to problems with pilot rotas.

In his letter, which emerged late on Thursday, O'Leary promised a "brighter future" for Ryanair's pilots, imploring all 4,200 of them not to leave for "one of these less financially secure or Brexit-challenged airlines" such as Norwegian or the recently folded Monarch.

The chief executive's proposed changes included pay increases, loyalty bonus payments, improved rotas and better compensation for pilots who had been forced to operate away from their home base.

Last month, after cancelling thousands of flights due to "messing up" pilot rotas, the Dublin-based carrier offered captains a bonus of up to £12,000 and first officers £6,000 in an attempt to get them to cooperate, but pilots said they wanted better working conditions instead.

This Monday, the airline's pilots banded together to form an unofficial trade union, agreeing to coordinate against the airline's strategy of negotiating separately with employee representative committees and instead chose to form a central committee aimed at increasing their bargaining power.

O'Leary stressed in his letter that Ryanair was a "very secure employer" before referring to its pilots as "the best in the business", asking them to not let rivals or their unions "demean or disparage our collective success".

The missive highlighted the recent bankruptcies of Air Berlin, Alitalia and Monarch, in addition to financial difficulties faced by fellow budget airline, Norwegian Air.

Last Friday, less than an hour before the Friday deadline set by the UK Civil Aviation Authority, the airline agreed to comply with demands to inform customers of their full compensation rights after flight cancelations and emailed the thousands of passengers affected to let them know they were entitled to be re-routed via other airlines.

Ryanair announced its first set of cancellations in mid-September when, in order to comply with new aviation rules relating to logbooks, it cut 2,100 flights as it rearranged pilots' rotas.

Later in September, the low-cost carrier cancelled a further 18,000 flights across the winter season, affecting more than 70,000 passengers in total.

Analysts at JP Morgan said while the cancellations would reduce near-term traffic targets, they would do very little in terms of long-term damage, suggesting the same was true of the impact to Ryanair's bottom line in the short-term, with fiscal year 2018 earnings now seen just 1% below the midpoint of the firm's unchanged guidance.

As of 0845 BST on Friday, shares had slipped just 0.41% to €16.90 each.

    The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.

    More company news from ShareCast