Tue, Oct 23, 2018 - Page 10 News List

Ryanair expects union worries to halt by year’s end

Reuters, DUBLIN

Ryanair Holdings PLC yesterday said it hopes to conclude its remaining labor issues by year’s end, signaling a possible end to damaging flight disruptions, which have dragged on its shares.

The Irish low-cost carrier, Europe’s largest, also said it might have to cut its capacity further this winter due to high oil costs and intense competition, although these factors were helping it to resolve its difficult industrial relations.

“Given the adverse environment that’s out there for airlines and the number of job losses being reported in recent weeks both by pilots and cabin crew, there is a much more sensible, common sense approach being taken by the unions,” chief executive Michael O’Leary said in a video presentation.

Shares in Ryanair posted a 7 percent fall in profit during its key April-September season due to high fuel costs, excess capacity and damage to bookings caused by a wave of strikes.

That was better than the 9 percent fall forecast by a poll of analysts after an Oct. 1 profit warning.

Over-capacity is likely to continue to weigh on average fares in the winter unless there is a major failure of a rival, but the failure of several small airlines in the past few weeks is concentrating the minds of staff, O’Leary said.

Ryanair only needs to secure agreements with two major unions, in Belgium and Germany, and is “hopeful of concluding agreements with them this side of Christmas,” he added.

The airline, which has in the past threatened cuts to growth during negotiations with unions, has struggled with labor relations since it bowed to pressure to recognize trade unions for the first time in December last year.

Ryanair cut its forecast for full-year profit by 12 percent three weeks ago and warned that worse might follow if the wave of pilot and cabin crew strikes across Europe continue to hit traffic and bookings.

Increases in the oil price or further falls in fares could force Ryanair to add to the 1 percent cut in capacity announced alongside a profit warning on Oct. 1.

“If oil remains at or above US$85 a barrel and fares are under pressure, then it would probably be the sensible thing to do to take a look at capacity,” chief financial officer Neil Sorohan said.

Ryanair, which makes most of its profit in the summer, reported a profit of 1.2 billion euros (US$1.38 billion) in the six months to Sept. 30. It reiterated its full-year profit forecast of between 1.1 billion euros and 1.2 billion euros.

That would be a 17 to 24 percent fall from the record 1.45 billion euro post-tax profit in its most recent financial year.

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