IRISH AIRLINE RYANAIR faces a potential bill of nearly €300 million in the coming years after recognising unions for the first time.
Earlier this week the company offered its Dublin pilots raises. In a letter to all Ryanair pilots employed in Dublin, chief commercial pilot officer Peter Bellew said the new agreement could secure workers pay increases of up to 20%.
Pilots had been offered the same deal last year, but on the condition that they would not be represented by trade unions.
However, last month the firm reversed its longstanding policy of not recognising unions as the airline faced the threat of widespread industrial action across Europe close to the busy Christmas period.
The about-face marked a dramatic shift for Ryanair, whose chief executive Michael O’leary was once quoted as saying he would rather cut off his own hands than sign a deal with a union.
Goodbody stockbrokers previously noted that unionisation would likely mean that Ryanair staff would likely get increased pay and bonuses.
It said that this could cost the airline between €70 million and €100 million over its 2019 financial year.
In a briefing note this morning, Goodbody analyst Mark Simpson stuck with the higher end of that forecast, adding that the budget airline would have to shell out even more cash the next year.
“Ryanair’s decision to recognise the unions will results in an estimated €173m of additional labour costs per annum by FY20 vs guidance for up to €100m next year,” he said.
“Additional costs will come from union recognition of cabin crew, a higher rate of wage inflation and the need to recruit an additional 330 pilots and 850 cabin crew to address union-led issues on terms and conditions.”
However, Simpson also said that Ryanair still had very competitive labour costs, comparing it favourably to the airline’s main European rival, Easyjet.
He said that while the extra cost would have an impact, the talks with unions were a positive sign for the company, which has spent much of the last month and more butting heads with pilots.
Ryanair has imposed a deadline of January 17 on its wage increase offer to workers. Dublin-based pilots are now due to be balloted on the proposal.