Ryanair retains profit forecast
Ryanair’s decision to recognise unions for the first time will not alter its profit forecast for the year, chief executive Michael O‘Leary has said.
Staff costs at the airline will increase by €100m in the current financial year following recent pay hikes, but rates of pay increases may moderate after that as the airline will no longer have to pay extra to attract pilots to a non-unionised airline, he said.
Ryanair’s share price rose over 2% yesterday. However, since the company’s announcement of trade union recognition, last Friday, around €1.5bn has been wiped from its market value.
“We continue to hold our guidance,” of €1.4bn to €1.45bn for the year to March 31, Mr O’Leary said.
“We have paid a lot of money to keep the unions out. I suspect there will be more modest rates of increase in the years going forward,” he said.
Ryanair also sees chances for new bases in France and Scandinavia thanks to its move to recognise unions, Mr O’Leary said.
“Clearly one of the upsides of engaging in union recognition from our point of view is that it opens up growth opportunities for us in France and Scandinavia, countries that were previously closed to us because we felt it was going to involve mandatory union recognition,” Mr O‘Leary said.
He said Ryanair could base up to 50 planes in France and that the airline had been in touch with pilot unions in France and Denmark already.
“If anything it accentuates the Ryanair model,” he said. However, while Mr O’Leary said he was serious about his decision to recognise trade unions, he said the airline would retain the right to move planes to different countries if unions made unreasonable demands.
Ryanair shocked investors on Friday by recognising trade unions for the first time in 32-years to try to avoid its first-ever strike later that day.
“The unions want to know there isn’t some kind of curve-ball. There isn’t”, Mr O‘Leary said ahead of his airline’s first meeting with Ireland’s pilot union last night.
“But if someone is being unreasonable and we are being completely messed around by a union, we will still move aircraft away from that base or country,” he said.
“That’s not the plan. The plan is to work with unions.” n Reuters
