Ryanair pilots to fight O'Leary ban on unions

[LTNman]

As reported in the Sunday Times:

RYANAIR'S pilots are attempting to break Michael O'Leary's
long-standing ban on trade unions ahead of next year's wage
negotiations.

If successful, the move could see the company's €93m wage bill
rocket. The move is being fiercely resisted by O'Leary, Ryanair's
chief executive.

Ryanair's near 500 pilots will renegotiate their five-year pay deal
in 2005. Informed sources say they are now examining ways of forming
a union to bargain with management.

It is understood the pilots want to change the manner in which they
are remunerated. Many favour securing bigger basic salaries instead
of share options, following the 30% collapse in the airline's share
price 10 days ago after a management profit warning.

"They want a bigger slice of the cake and share options no longer
look as attractive as they once were," said one source.

Pilots also want to abolish the practice of being moved from base to
base at the instruction of the airline. They are the biggest earners
among Ryanair's workforce and would have a strong bargaining
position but O'Leary made it clear he will not negotiate with any
trade union. "If any of our fellas aren't happy with the current
arrangement then they're free to go elsewhere," he said. "Godspeed
to them. But don't forget that SAS let 150 pilots go in the past six
months; Jetmagic in Ireland has gone bust and Flying Finn is close
to bankruptcy so there aren't a lot of airlines hiring at the
moment."

A successful move by pilots to form a trade union would encourage
other workers at the airline to follow suit and could sigificantly
inflate Ryanair's staff costs. O'Leary has rebuffed a number of
previous attempts by pilots for union recognition.

"They didn't succeed in the past and they won't succeed in the
future," he said.

Ryanair's pilots are currently represented in negotiations by
self-appointed worker representative groups in each country where
the firm has bases.

O'Leary described the share options as the "icing on the cake" for
pilots. He ruled out replacing them with bigger pay packets.

He said the pilots' options are currently worth between €150m and
€200m. Many of these were awarded in the company's early years as a
public company and were valued at €1.50 and €2.50. Ryanair's share
price closed in Dublin on Friday at €5.20.

O'Leary said Ryanair's pilots were among the best paid in Europe. On
average, captains earn about €120,000 while first officers receive
between €75,000 and €80,000.

Concerns over Ryanair's staff costs were last week highlighted in a
report by Andrew Lobbenberg, the ABN Amro aviation analyst in
London. He said pilot costs would face "upward pressure" in the
future, as stock options no longer appeared as attractive to staff
and a "union organising effort" could be expected soon.

Lobbenberg estimated that Ryanair's costs will rise to 191m in
2006, driven in large part by Ryanair's aggressive expansion plans.

He currently has a "reduce" recommendation on Ryanair and a "fair
value" of €4.40 on each share.