A Ryanair airplane taxis past two parked aircraft at Weeze Airport, near the German-Dutch border, during a strike of Ryanair airline crews in Weeze, Germany, September 12, 2018.
- Low-cost airline Ryanair - Europe's largest airline - announced that it would cut 900 pilot and flight attendant jobs this year.
- The announcement comes following a rough second quarter for the airline, which saw profits drop 21%.
- Ryanair faced several challenges stemming from the global Boeing 737 Max grounding, the increasing likelihood of a no-deal Brexit, and lower fares combined with weaker demand in the UK and overcapacity in Germany.
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Ryanair CEO Michael O'Leary warned staff on Wednesday that imminent job cuts are "unavoidable" as the airline suffered a number of setbacks this year.
The airline said that it expected to lay off 900 flight crew employees beginning this fall, including around 500 pilots and 400 flight attendants.
O'Leary also warned of planned service cuts, including the possibility of closed bases.
"It's been a challenging summer," O'Leary said, "[and] we're facing into a very difficult winter."
The announcement, delivered by O'Leary in a video message to Ryanair employees, part of which was posted by Sky, came in the same week that the airline reported a fall in revenue, including a 21% drop in quarterly profits, amid several convergent headwinds faced by the airline in the first half of 2019.
Ryanair has 135 Boeing 737 Max aircraft on order, with the first five scheduled to be delivered this autumn. However, as the plane's grounding drags on, the airline faces capacity uncertainty, having planed its routes assuming the new plane's reliability. The inability to replace older aircraft with the more efficient 737 Max has also driven up fuel consumption and associated costs.
While the airline expected to take delivery of 58 Max aircraft by summer 2020, it now expects "at best" 30 deliveries, O'Leary said in the video.
O'Leary also noted "higher staff costs, largely because of the big pilot and cabin crew pay increases we negotiated last year," based on revenue forecasts that the airline ultimately missed. Additionally, fewer pilots and flight attendants are quitting to take other jobs, meaning staff reductions through attrition are not possible.
Reuters
File photo: Ryanair CEO O'Leary holds news conference in Machelen near Brussels
The increasing likelihood of a "no-deal Brexit," pushed for by new UK prime minister Boris Johnson, also contributed to concerns, O'Leary said.
"We're worried this could have quite a damaging effect, particularly on our UK bases and on some of our Irish bases, which are heavily dependent on people traveling between Ireland and the UK."
Ryanair warned in its quarterly earnings report that it could reduce or eliminate its Glasgow, Edinburgh, and Belfast routes in the event of a no-deal Brexit.
O'Leary also cited tight competition in Germany, along with increasing fuel prices, as contributing to the drop.
"I'm sorry to advise you that this means that we have to cut our aircraft numbers and our staffing, not just for summer 2020, but also in winter 2019," he said in the video, according to RTE. "This will result in some base cuts, some base closures, and I'm very sorry to say, some job losses this winter for pilots and cabin crew."
According to The Guardian, O'Leary agreed to take a 50% pay cut as well. His 1 million euro ($1,112,400) salary will be reduced to 500,000 euros ($556,200), and his maximum bonus, currently also 1 million euros, will max out at 500,000 euros. However, he could still earn nearly 100 million euros ($111,266,000) if the airline performs above expectations over the next five years based on stock awards.
O'Leary said that details of the job cuts and base closures would be announced in late-August. The airline had an average of 14,000 flight staff during the first quarter of this year.