Ryanair takes on competitors over crisis
LONDON: Ireland’s crisis-hit Ryanair has apologised to its pilots and offered to pay more than budget airline rivals, as the likes of EasyJet look to profit from sector turbulence that rumbled further on Friday.
Europe’s no-frills airline industry flew into difficulty last month when Ryanair was forced to cancel 20,000 flights up to March, mainly owing to a shortage of pilots. That was followed by the collapse this week of British budget carrier Monarch Airlines, while shares in EasyJet slid Friday on a poorly-received trading update. Ryanair chief executive Michael O’Leary has written to pilots with a pledge to beat pay offered by competitors and to improve working conditions over the next six months. A copy of the letter was obtained by AFP on Friday.
“If you have, or are considering joining one of these less financially secure or Brexit-challenged airlines, I urge you to stay with Ryanair for a brighter better future for you and your family,” he wrote. EasyJet — widely regarded as a key beneficiary of a reduced Ryanair flights schedule — set up a Vienna-based division in July that will allow it to fly across the European Union amid any Brexit fallout.
EasyJet said Friday that it will take a £100-million ($132-million, 112-million-euro) charge on the Brexit-fuelled slump in the pound in its annual 2016/2017 earnings. Analysts said however that EasyJet now has a “golden” chance to steal a march on Ryanair, thanks also to the collapse of Monarch.
A “currency hit from a weaker pound and an intensifying price war between budget airlines are the principal causes” for a drop in EasyJet’s share price, said London Capital Group analyst Jasper Lawler.
But he added: “The demise of Monarch while Ryanair bookings are in disarray presents EasyJet with a golden opportunity to capture market share.”
O’Leary said in his letter that Ryanair pilots’ pay will now be benchmarked against its competitors, “most notably Jet2 and Norwegian” to “target (Boeing) 737 recruits from these weaker, lower pay airlines”.
Other conditions were also set to improve, with an increase in the number of aircraft bases and a better system for allocating leave. “There are a lot of promises made in the letter but no details of what the cost of these promises will be,” a spokesman for the Irish Air Line Pilots’ Association said Friday.
“Our members have experienced Ryanair promises before and therefore we will need to carefully consider each point before we decide on a response.”
The Dublin-based carrier has been hit by pilots and cabin crew being forced to take outstanding holiday entitlement by the end of the year as part of new company rules.
It has been forced to cancel flights also because of air traffic control delays, strikes and weather disruption.
Monarch declared bankruptcy after failing to secure fresh capital, leaving British authorities to fly home tens of thousands of customers stranded abroad, while around 2,000 staff were made redundant. “EasyJet looks set to benefit from not only Ryanair passengers rebooking over the coming months, but also absorbing the demand on routes from the collapse of Monarch,” said Neil Wilson, senior market analyst at trading group ETX Capital.—AFP