October 22, 2018 / 8:12 AM / 4 months ago

Ryanair hopeful of deals with last major unions by Christmas

DUBLIN (Reuters) - Ryanair hopes to reach deals with all of its major unions by Christmas, in a sign an end may be in sight to the damaging flight disruptions which have dragged on its shares.

FILE PHOTO: Ryanair logo is pictured on the the jacket of a cabin crew member ahead of a news conference by Ryanair union representatives in Brussels, Belgium September 13, 2018. REUTERS/Francois Lenoir/File Photo

The Irish low-cost carrier, Europe’s largest, on Monday reported a 7 percent fall in profits due in part to high fuel costs and intense competition, but it said these factors were helping it resolve its industrial relations troubles.

“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.

Recent progress “leaves us with only really Germany and to a lesser extent Belgium as the only two larger markets where we haven’t now concluded agreements,” O’Leary said.

“We would be hopeful of concluding agreements with them this side of Christmas,” he added.

Ryanair shares were 3.9 percent higher at 11.97 euros at 0925 GMT, partly because the fall in April-September profit was less than the 9 percent drop forecast by analysts.

Investors have also been watching closely for progress in talks with unions after a year of turmoil since Ryanair bowed to pressure to recognise them for the first time last December.

UNION AWAITS OFFER

Ryanair’s shares are down 17 percent compared to three months ago and by almost 40 percent from a peak of 19.39 euros in August last year.

The airline issued a profit warning on Oct. 1 citing damage to booking from strikes and cutting its forecast for full-year profit by 12 percent.

It also angered unions by closing bases in Germany and the Netherlands and on Monday Chief Financial Officer Neil Sorohan said cutting capacity further “would probably be the sensible thing to do” if oil prices climb or fares fall further.

A spokesman for Belgium’s LBC-NVK union said it was waiting for an offer from Ryanair on Thursday and said they had warned the airline they could strike again if there is no progress.

A spokesman for German unions VC and Verdi did not immediately respond to a request for comment.

Ryanair, which makes most of its profit in the summer, reported a profit of 1.2 billion euros ($1.38 billion) in the six months to Sept. 30, better than the 1.127 billion euros forecast in a company poll of more than 10 analysts.

Goodbody analyst Mark Simpson said this was due to a smaller than expected loss at subsidiary Laudamotion and a lower tax charge and said the results pointed to good cost control and an attractive foreign exchange hedge.

But Ryanair would have to follow up on union recognition agreements with more complex collective labour agreements, which “does leave the risk of further disruption as negotiations continue”, Simpson added.

($1 = 0.8685 euros)

Reporting by Conor Humphries; Editing by Amrutha Gayathri and Alexander Smith

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