October 22, 2018 / 5:05 AM / a month ago

Ryanair hopes to land deals with major unions by Christmas

DUBLIN (Reuters) - Ryanair (RYA.I) hopes to reach deals with all of its major unions by Christmas, its chief executive said on Monday, in a sign an end may be in sight to disruptions which have hit its profit and shares.

FILE PHOTO: A Ryanair Boeing 737-800 plane taxis at Lisbon's airport, Portugal September 27, 2018. REUTERS/Rafael Marchante/File Photo

The Irish low-cost carrier, Europe’s largest, on Monday reported a 7 percent fall in profits in the six months to Sept. 30 on high fuel costs and intense competition.

But it said these factors were helping it to 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.

O’Leary said that recent progress in talks left Germany and Belgium as the only two large markets for the airline where recognition agreements had not been secured.

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

The fall in profit was less than the 9 percent drop forecast by analysts and Ryanair shares were 4.2 percent higher at 12.00 euros at 1100 GMT.

Ryanair’s shares are almost 40 percent down from a peak of 19.39 euros in August last year before the industrial relations issues began.

A staff revolt forced management to recognize unions for the first time last December and the airline has since struggled to put in place union recognition agreements.

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

A spokesman for German unions VC said he saw “no real progress” in talks with Ryanair, which also needs to secure recognition deals in the Netherlands and Sweden.

On Friday it said it had reached agreement with British, Portuguese and Italian pilots and was close to a deal with Spanish pilots, although the British union said the deal had not been approved by its members yet.

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

But on Monday, O’Leary said much of the weakness of recent weeks was sector-wide rather than specific to Ryanair.

Over-capacity in European short-haul will push Ryanair fares down by 2 percent in the six months to March 31 compared to the same period last year, O’Leary forecast. He warned he would not rule out a 3 percent fall.

“We are entering into a grim winter in terms of declining air fares,” he told an analyst conference call. “But moving into the summer of 2019 I would expect to see some upward traction on pricing... following oil prices with a 12-month lag.”

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.

($1 = 0.8685 euros)

Additional reporting by Ilona Wissenbach and Daphne Psaledakis; Editing by Amrutha Gayathri and Alexander Smith

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