INTERVIEW-Defiant O'Leary says union recognition sets stage for Ryanair expansion
expansion@
* O’Leary says Ryanair could move 50 planes to France
* Says serious about union recognition
* But warned unions it can shift planes (Adds quotes)
DUBLIN, Dec 19 (Reuters) – Ryanair Chief Executive Michael O’Leary said his decision to recognise trade unions for the first time in 32 years will pave the way for a major expansion in France and Scandinavia and would not damage the carrier’s low-cost model.
But he also warned unions that he would not be a soft-touch and if they put forward unreasonable demands he would simply shift planes and jobs to other jurisdictions.
Speaking to Reuters on Tuesday following his surprise announcement on Friday to recognise trade unions – one of the biggest u-turns in recent European corporate history – O’Leary said he would be genuine in his dealings with unions.
“This is not a ruse. This is serious,” O’Leary said of the decision, which he said he ran past the company’s board of directors on Thursday night. “This is in many respects my idea and I am driving it through.”
“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.
O’Leary rejected media speculation that he may step aside to make way for Chief Operations Officer Peter Bellew, who is leading talks with pilots. “Am I going to leave? No. I am going to stay,” he said.
Union recognition would open the way for Ryanair to operate in heavily unionized countries like France, where it could base up to 50 planes, he said, although he declined to say how fast it would move there.
Ryanair will still meet its target of flying 200 million passengers per year by 2024, up from just under 130 million this year, he said.
In a sign of its seriousness about union recognition he said management had already been in touch with pilot unions in France, despite not having any bases in the country at present.
O’Leary said the decision to recognise unions would not impact profit and he still expected Ryanair to earn between 1.4 billion and 1.45 billion euros ($1.7 bln) in the year to March 2018.
He said he did not expect staff costs to increase beyond the extra 100 million euros announced following the cancellation of 20,000 flights in September.
“We have already admitted there will be an uptick in labour costs next year. But will it alter our model? No,” he said.
“We will still have much lower aircraft costs, much lower financing costs, much lower airport deals. That will all remain unchanged.”
In the longer term, the rate of growth of staff costs could actually decrease as he said pilots prefer to work in unionised airlines and Ryanair would no longer need to pay a premium to attract them.
O’Leary said the decision to recognise unions was not a result of management weakness or union strength but more to do with the fact that the airline was facing the prospect of compensating 150,000 passengers in Christmas week and possibly more after that.
“Union recognition was always going to happen when we moved into France. We have just moved that forward,” he said.
Bellew and Chief People Officer Eddie Wilson are due to meet with the Irish pilots union for the first time on Tuesday evening. O’Leary declined to comment on what Ryanair would concede, but said Ryanair would go in with a “can do” attitude.
“If you need to go on strike just to test our mettle, then go ahead,” O’Leary said. “But not in Christmas week. And not one that disrupts all our customers across Europe.”
Ryanair shares closed up 2.3 percent on Tuesday at 14.95 euros, but well below the Friday opening of 17.6 euros as investors have fretted that union recognition could potentially damage the carrier’s low-cost business model. ($1 = 0.8466 euros) (Additional reporting by Victoria Bryan; Editing by Mark Potter and Susan Fenton)
Article Courtesy of CNBC
