ryanair

[ude]

fr to reduce pilot workforce by 35% ?

[mcgoo]

Source/Link??

[hardcase]

this was in an Irish Newspaper on Wednesday..


FOUR hundred Ryanair pilots and cabin crew will be forced to take one week of unpaid leave this year as the budget airline cuts back flights from Dublin and Stansted.

Michael O'Leary, the chief executive of Ryanair, said the airline's executives would also have their pay cut by at least 10pc because of the financial difficulties facing the sector.

The unpaid holiday will be imposed on staff at Dublin and Stansted. Each staff member faces losing about €1,500, based on an average Ryanair salary of €60,000.

[cockney steve]

Each staff member faces losing about €1,500, based on an average Ryanair salary of €60,000.

Bit of dodgy maths , there? -Even allowing for the journo's overindulgence in the "black Velvet" and their legendary "poetic license"......allowing for stoppages, etc....I'd find it hard to see 1K nett loss from 1/52 x 60K

[captplaystation]

1 week off for 400 employees ( including cabin staff ) doesn't strike me as a 35% reduction in flight crew in an airline employing around 2000 pilots, or am I missing something here ? :hmm:

[sky9]

Clear case of breach of contract. But then Ryanair's record in the courts is nothing to write home about.
Just ignore it and turn up for work.

[EmeraldEire]

Was this topic not already flogged to death on another thread???

[potkettleblack]

No point in turning up for work if your paid by the block hour.

[JOE MAXY]

"clear breach of contract"

Have you read said contract....pilots new contract from Oct07 covers this eventuality, and they accepted it.

[Herod]

A while ago now, but this was also in the contract offered to the "buzz" pilots when they were taken over, one reason many opted for redundancy. That said, the option would probably be dismissals (less than two year's service = no redundancy pay) and I'm sure most employees would sooner sacrifice 1500 euros and still have a job to go back to. Knock Ryanair all you like but they're still employing people.

[BlueRay]

this is such a non thread, ryan air just taking sensible business decision in complicated trading environment.
'
A clever decision that will see little pain for employees while ensuring when the time comes for an upturn, those loyal and committee staff will benefit from their growing dominance in the sector. Simple. There are no fat cats at ryan air, lining their pockets unlike some national institutions i know.

[FlyingOfficerKite]

There are no fat cats at ryan air, lining their pockets unlike some national institutions i know.

Can MO'L be described as a 'fat cat', from the point of view of the personal wealth he has derived from his time as CEO of Ryanair? Discuss.

FOK :yuk:

[On the Straight and Level]

Why doesn't MOL dip in to Ryanair's 'War Chest'? I've heard mention a while ago that it was 2 billion euros by some journo report along the way. If true, then shouldn't this resource be used in the difficult times to offset costs, after all it was gained during the good times.

[FlyingOfficerKite]

A 2 billion euro reserve might be a 'War Chest' in times of feast, but in times of famine it will be no more than a holster - without a loaded gun!

FOK :=

[limagolf]

Let's hope the 2 billions are not in an Icelandic bank account.;)

[CaptKremin]

An immensely rich man who sits on his butt atop a pile of lucre and berates low paid workers for their greed - that is a 'fat cat'.
Indeed, the term I'd use is far less mild.

With his share price at 1.90, and an IMF forecast of a further 20% drop in the stock market next week (down to 1.52) at what point does FR start to look highly attractive to a hostile takeover? How much would it cost a corporate raider to buy him out at 1.52 a share? With 51% the new owner has access to that pot of gold - 2 billion euro - or is it more? I hear 6 billion mentioned elsewhere!
I would imagine FR is starting to look very juicy to anyone with that kind of capital. Buy it up and assett strip it, you'd probably walk away with a few billion in cash. How hilarious would that be!

Micko - you better start spending money buying back your own shares soon sonny (he's obviously waiting until the price has really tanked before making the move).

[FlyingOfficerKite]

Indeed.

But, as in all these cases it's the innocents you feel sorry for - all the flight and cabin crew who wanted to make a fast buck and sold their souls in the process.

Mr Mickphistopheles methinks!

FOK :yuk:

[chrisbl]

How much would it cost a corporate raider to buy him out at 1.52 a share? With 51% the new owner has access to that pot of gold - 2 billion euro - or is it more? I hear 6 billion mentioned elsewhere!


Possible if anyone could borrow the money to do the deal. FR hold all the cards with their cash holding.

[5tarbuck]

There are still people out there with cash. Lots of it.

What is the Capitalised Value of 51% of Ryanair at 1.50 per share?
Anyone?

Less than 6 billion? You betcha! WAY less......

[CaptainJim]

This will not last forever and the day will come where the bigman goes too far & people stand together & revolt. Ryanair will definetly be the first. Unions are a thing of the past but will also be a thing of the future.

Why do we have employee rights if they are not enforced?

Recent events have proved that a completely free market is not self sustainable due too greed and exploitaiton.

On the positive side there probably won't be many airlines left in a few years and then it will be easier to get unions recognised and the airlines won't care cos they will charge what they like again. Everyone wins except the consumer.

But what do I care I'm a pilot.

Bring back the old days.

[RAT 5]

I apologise for not trawling through the whole thread for an answer. What is the truth about RYR hedging fuel at U$129; for how long? If true, what medium term effect will this have on profits and share price? With oil at <U$80the business model must not be functioning in the way it was envisaged.

[Golf Charlie Charlie]

The issue on the fuel hedging depends on the nature of the contracts. If they are options to buy at $129 or whatever, they do not have to take up the options, as they just fall away unused (though there would be a cost to writing the option in the first place). On the other hand, if they are forward contracts whereby the airline is contracted to take delivery of the oil, they are screwed, unless they can sell those contracts onto another party, or otherwise sell their way out of such deals.

[Herc708]

Agree with 3* - all is not well. Note TPG / David Bonderman are significant inestors in RYR and they (TPG) have taken some awful hits lately - one loss alone in the last few weeks was $1b on one of the trashed American Banks. They may be unloading shares or something else is at work at RYR. Note that the shuffling of aircraft on and off the balance sheet will almost certainly have to come to an end and RYR's own $'s will have to be used to pay for the aircraft from Boeing and not some 'Icelandic' style lessors

[the grim repa]

hedged to 31st dec 2008.then unhedged.

[sky9]

Note that the shuffling of aircraft on and off the balance sheet will almost certainly have to come to an end and RYR's own $'s will have to be used to pay for the aircraft from Boeing

I've been highlighting this for some years, what I can never understand is where do the profits go on the sale and leaseback.

[Golf Charlie Charlie]

The profits on a sale and leaseback are like any other profits the company earns, and they just go back into the business to finance expansion and/or working capital, as they see fit or as needs arise (minus amounts paid out for dividends). It's a perfectly legitimate activity, especially if (assuming what I read on this forum is true) the airline acquired the aircraft at a good price (post-9/11 ?) and feel able to take advantage of the rise in the strong asset price of used 737-800s worldwide as new airframes are delivered to Ryanair. At the same time, leasing the aircraft offers several useful tax advantages and strengthens the balance sheet (eg. reduces net debt, other things being equal). The risk is that if they come to depend on the income/cash/profit from these transactions, their luck could run out eventually if residual values worsen or demand levels change around the world, and it might expose a poorer quality/profitability of the underlying core business at Ryanair than we might think. I stress, I have no axe to grind here on any side of the argument, and I don't know Ryanair's financial position other than what is publicly available and/or what I read here.

[CaptKremin]

The risk is that if they come to depend on the income/cash/profit from these transactions, their luck could run out eventually if residual values worsen or demand levels change around the world, and it might expose a poorer quality/profitability of the underlying core business at Ryanair than we might think.

That day has come.
1.90 and sinking........

[marchino61]

There has been a lot of pure speculation on this thread about Ryanair's cash pile, the possibility of asset stripping it, etc.

I thought I would go and find some facts. Here they are:

Market capitalisation EUR 3.4 bn - as at 17/10/08
Cash EUR 1.4 bn - as at 31/3/08
HOWEVER, borrowings EUR 1.8 bn - as at 31/3/08

(the company is highly geared, not cash rich at all overall).

Net assets per share EUR 1.67 as at 31/3/08 (likely to be lower now)

Share price EUR 2.31 as at 17/10/08

So RYA is still trading well above the value of its assets and as some of those assets are likely to be aircraft, they are probably not worth as much today as they are valued at on the books.

Also, some of that cash in the bank is only there in the form of a "loan" from its customers. Like most retail businesses, Ryanair benefits from the fact that customers pay up front, yet the company gets credit from many of its suppliers, often 30 days. This means it should always be sitting on at least 30 days' worth of its customers' cash.

[speedrestriction]

Is €60k really the company wide average wage?

[CaptKremin]

Market capitalisation EUR 3.4 bn - as at 17/10/08
Cash EUR 1.4 bn - as at 31/3/08
HOWEVER, borrowings EUR 1.8 bn - as at 31/3/08
(the company is highly geared, not cash rich at all overall).
Net assets per share EUR 1.67 as at 31/3/08 (likely to be lower now)
Share price EUR 2.31 as at 17/10/08

Good work getting the facts together marchino61. I actually stumbled over the Market Cap value elsewhere yesterday and was interested to note that it is so low - and only at that value since a small rally occurred in the last few days. The Market Cap at 1.90 per share (where it was a week ago) is more like 2.8Bn., and as the NAPS value shows it is still over valued at that level.

[BALLSOUT]

Sounds like we are in good shape.The program on chanel 4, monday evening claimed B A was in debt to the company pension scheme alone by £1.7billion. They also said that this figure exceeded their market capitalisation.
So seems like we are in much better shape than them!

[the grim repa]

nor do you have a pension.

[cwatters]

Anyone else see the Ryanair feature on BBC Watchdog recently? The BBC did their normal trick of just turning up outside the company HQ without an appointment. They forgot MO'L isn't exactly a normal company boss and he agreed to see them on the spot. If the BBC want to play that game with MOL they need to send a better interviewer :-)

[davidjohnson6]

Apologies if this is not strictly on-topic, but this might explain a bit about how pension scheme obligations are reflected in an airline's market capitalisation.

If it is generally known that a company owes a large amount of money to a pension scheme this has to come out of future profits and the market cap will be lower to reflect this.

Consider a company that might normally be worth 4 bn pounds based on expected profits.
If it's public knowledge that it's behind in its pension payments to the tune of 3 bn pounds, the share price and thus market cap will be knocked down to somewhere *below* 1 bn. It'll be *below* because a big future liability makes it difficult for a company to run its normal business. In the case of BA in the past the pension debt meant it wasn't able to arrange financing to purchase new planes and grow / renew its fleet of planes.

Of course, the amount that a company is deemed to owe its pension scheme is a complex calculation - and makes a large number of assumptions about stock market returns. The key is that pensions were traditionally defined benefit - meaning your employer promised to put enough cash into the pension scheme so that you were guaranteed e.g. 20,000 pounds income per year - i.e. the employer takes the risk over stock market returns between now and your retirement date.

If the stock market takes a big tumble as has happened recently, the value of the pension pot takes a fall and thus the company is considered liable to cover the shortfall and so owe a lot more money into the pension pot. There are of course techniques to look at long term averages, but this should give the rough idea.

Some of the large legacy carriers have been described as pension schemes that happen to run an airline

[glad rag]

Well, he sure knows how to think on his feet, that's for sure.

[CaptKremin]

Apologies if this is not strictly on-topic, but this might explain a bit about how pension scheme obligations are reflected in an airline's market capitalisation.

You poor buggers in the UK can thank Gordon Brown for that, and for thereby destroying the DBS pension system. A lot of people spent their whole lives contributing to such schemes, and at the stroke of a pen Brown destroyed their retirement funds. I know some of the victims.

But it wasn't all bad news - the fat cat bosses and shareholders got even bigger bonuses and dividends.

This is the greed that destroyed Capitalism.
Good Riddance to it - and Mr.Brown too.

[stormin norman]

Ballsout.

If 'good shape' includes No pension and enforced unpaid time off,i'd hate to be with Ryanair when it gets bad !

[LCYslicker]

'No pension' was the same at RY in good times and bad - a business decision taken by any management who has started any business in the past 20 years. Defined benefit pension schemes are wonderful for those who have one (I don't), hence the favoured ones fight to keep them. Eg BA staff were asked it they wanted to keep theirs, they said yes, but, to make it affordable, BA put nearly £1bn cash in and the staff took slight benefit reductions later on to keep the deficit under control. It hasn't worked, and the pension deficit was £1.7bn in March, and will be much worse now 'cos stock markets are collapsing. So another round of haggling comes if staff want to keep their two-thirds final salary pensions - and who wouldn't? Don't even think what the unfunded public sector defined benefit pension (non-)scheme will cost us all in future years...

On the time-off, we're going into a deep recession, and RY's grounding planes over the winter because it is less loss-making than flying them, plain and simple. The planes will fly again for summer. Better times will follow in due course, everyone will go back to 900 hrs per annum. It's better than the US majors, who routinely 'furlough' (= lay off) thousands of pilots when recession arrives (Gulf Wars 1 and 2, 9/11), and it can take years before the most junior ones get rehired.

I've said this before, but RY and EZ have real financial strength - they may (and probably will) make losses in this recession, but they'll come out the other side and all the pilots will still have their jobs. I'm afraid that can't be said about all airlines - LTE the latest, and, as we go into winter, it won't be the last.

[the grim repa]

yeah.you will do 900 hours right enough.you will do them in 9 months followed by 3 months unpaid leave.in managements words"if you don't like ,then f off".

[FlyingOfficerKite]

... which is all good management and shows a positive, caring attitude towards ones employees - NOT!

I was told years ago that 'you can either be liked or be successful' - well Ryanair management epitomize that edict

Where do these w*****rs get off? Well I suppose they don't - it's a sad reflection on the state of modern business that in order to be successful the workers pay the price. Wasn't that the attitude of Victorian bosses and
haven't workers strived for over a hundred years to abolish that state of affairs?! Obviously not.

FOK :confused: