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CAPA Live. Ryanair: growth good for airline jobs. 2000 pilots needed

Analysis

On 12-Jul-2021 Ryanair announced plans to recruit 2,000 new pilots. This follows plans announced in Jun-2021 to hire up to 1,000 cabin crew and 50 new positions at its Madrid innovation centre.

Eddie Wilson, CEO of Ryanair DAC (the Irish airline that forms the Ryanair Group's biggest operating unit), told CAPA Live on 14-Jul-2021 that Ryanair's growth and financial strength are advantages in staff recruitment and retention: "You ask anyone on the street, who's going to survive this crisis, people say Ryanair, and our employees are no different".

Both Ryanair and fellow ultra LCC Wizz Air are growing more aggressively than other leading European airline groups. The smaller Wizz Air plans growth at higher percentage rates, but Ryanair is set to add more aircraft and passenger numbers in absolute terms in the next four to five years.

Ryanair's growth should lead to more flight crew recruitment and promotion opportunities than at European rivals – positive factors for industrial relations.

Summary

  • Ryanair has 205 aircraft to be delivered by 2024.
  • In Europe, only Wizz Air has more outstanding orders in total, but Ryanair more deliveries due by 2024.
  • Ryanair aims to add more than 51 million annual passengers and c160 aircraft in FY2026 vs FY2020; Wizz Air aims to add c.50 million annual passengers and c125 aircraft.
  • Ryanair cut pilot hours and pay in the crisis, but agreed to return to normal hours and pay in the recovery.
  • Ryanair should be able to offer more job opportunities than European rivals.

Ryanair has 205 aircraft to be delivered by 2024

Ryanair said that the 2,000 new pilots would be needed to crew its planned aircraft deliveries over the next three years.

According to the CAPA Fleet Database at 12-Jul-2021, Ryanair has taken delivery of the first five of its order of 210 Boeing 737 MAX 8-200 aircraft. The remaining 205 are due for delivery by 2024.

Ryanair Holdings PLC: projected annual aircraft deliveries between 2021 and 2024, as at 12-Jul-2021

 

In Europe, only Wizz Air has more outstanding orders in total

Ryanair's outstanding order of 205 aircraft is the second highest of any airline group in Europe. At the top of the list is Wizz Air – like Ryanair, an ultra-LCC – with 241 Airbus narrowbodies on order.

Both ultra LCCs are comfortably ahead of Lufthansa and Aeroflot, which are in joint third place with a total of 157 outstanding orders, comprising both narrowbodies and widebodies.

The next biggest narrowbody order after Wizz Air and Ryanair is the 108 Airbus A320 family deliveries due for easyJet, with the majority of deliveries not due until 2024-2027.

Norwegian Air Shuttle has 91 Boeing narrowbodies on order, a legacy of its expansive past, but delivery dates are uncertain as the group is restructuring.

Ryanair has more deliveries due in the next three years than Wizz Air

The two ultra-LCCs, Wizz Air and Ryanair, have by far the biggest orders in Europe. However, Wizz Air deliveries are spread out until 2027.

Ryanair's 205 deliveries are all due over the next three years up to the end of 2024, comfortably ahead of Wizz Air's 109 expected in the same time frame.

Top 10 European airline groups by total number of aircraft on order at 12-Jul-2021

Rank

Airline Group

Widebody

Narrowbody

Other

Total

1

Wizz Air Group

0

241

0

241

2

Deutsche Lufthansa AG

77

146

0

223

3

Ryanair Holdings PLC

0

205

0

205

4

Aeroflot Group

18

71

87

176

5

Turkish Airlines Group

28

109

0

137

6

Norwegian Group

21

91

0

112

7

Air France-KLM S.A.

28

0

81

109

8

International Airlines Group (IAG)

49

59

0

108

9

EasyJet plc

0

108

0

108

10

Pegasus Airlines Group

0

54

0

54

Ryanair aims to add more than 51 million annual passengers and c160 aircraft in FY2026 vs FY2020

Ryanair's 737MAX deliveries will be used partly to replace older 737-800s, but will also be crucial to achieving traffic growth. It aims to carry more than 200 million passengers in FY2026 (year to Mar-2026).

In FY2020, most of which was pre-COVID, Ryanair carried 140 million passengers.

This slumped to 27.5 million in FY2021. For the current financial year, FY2022, Ryanair expects traffic at the lower end of a guidance range of between 80 million and 120 million passengers.

Relative to FY2020, the FY2026 target represents more than 51 million additional passengers.

Net of aircraft retirements, its fleet is expected to grow by approximately 160 aircraft from the 441 it had at the end of FY2020 to exceed 600 in FY2026.

Ryanair: annual passenger targets (millions), FY2017 to FY2026 (E)

 

Wizz Air aims to add c.50 million annual passengers and c125 aircraft in FY2026 vs FY2020

Wizz Air carried 40 million passengers in FY2020 (it also has a March financial year end).

It does not have a future annual passenger target, but its fleet plan aims to grow just over twofold, from 121 million aircraft at the end of FY2020 to 246 aircraft at the end of FY2026.

An increase in average aircraft size from 200.8 seats to 228.5 (driven by A321neo deliveries) seats should lead to a more than doubling of passenger numbers to around 90 million in FY2026. This would represent growth of 125% for Wizz Air, compared with around 45% for Ryanair.

However, Wizz Air's additional 50 million passengers from FY2020 to FY2026 would not quite match Ryanair's more than 51 million.

Wizz Air: fleet plan to FY2027, from FY2015/16

 

Ryanair cut pilot hours and pay in the crisis...

In FY2021 Ryanair Group's staff costs fell by 57%, to EUR472.2 million. Labour costs did not fall in line with the 74% drop in sectors flown, partly because not all jobs are directly related to flying, but also because Ryanair's approach was to retain headcount as much as possible in readiness for the recovery.

Similarly, Wizz Air's staff cost reduction of 43% in FY2021 was less than its 62% reduction in flights.

Ryanair minimised job losses by agreeing cuts in hours and in pay for flight crew and by participating in government job support schemes. The above staff cost figure for FY2021 is net of EUR84 million of payroll support from governments in Ryanair's markets (without which the reduction would have been only 50%).

...but agreed to return to normal hours and pay in the recovery

Ryanair's increased capacity since the low point of the coronavirus pandemic is now prompting a return to normal activity levels for some of its pilots. Agreements with pilots in the crisis envisaged this.

Pilots at Ryanair's Spanish bases had a reduction of between 20% and 50% in their work activity, under a Temporary Employment Regulation in Spain.

On 24-Jun-2021 the Spanish pilot union SEPLA announced that these pilots would return to 100% of their hours and salaries. Ryanair is the second airline, after easyJet, to dispense with the Temporary Employment Regulation in Spain.

According to SEPLA, Ryanair responded to pressure from the union, which did not want the airline to resort to using external staff while retaining the labour restructuring measure.

Although SEPLA's statement contained some mild criticism of Ryanair and the possibility of its using external pilots, its tone was generally positive and optimistic about relations with the airline and the prospects for a pilots' collective agreement.

According to Ryanair's Eddie Wilson, speaking at CAPA Live on 14-Jul-2021, employees appreciate the airline's no nonsense approach to reducing hours and pay in the crisis, and its commitment to restore pre-COVID conditions.

"…We are straight up in how we do our business and the vast majority of our people recognise that. Most people in this world want to work less and be paid more. That's fine, but this isn't the time for it. We did those agreements really, really quick, and that's a function of our people and what they believe needed to be done…", Mr Wilson said.

Ryanair should be able to offer more job opportunities than European rivals

Both Ryanair and Wizz Air plan aggressive growth over the next four to five years, more than other airlines in Europe.

Wizz Air's growth will be more rapid in percentage terms, but Ryanair's growth plans imply that it will add more aircraft and passengers in absolute terms.

This suggests that Ryanair should be in a position to offer more job opportunities in the coming four to five years than any other airline group in Europe.

Growth should be positive for industrial relations at Ryanair

There have been times when Ryanair has been criticised for its human resources policies.

In the past, industrial relations were sometimes tarnished by its use of contract staff, its preference for Irish labour law over local labour in employment contracts, and its refusal to negotiate with unions until 2018.

However, in an environment when many of the large airline groups competing with Ryanair will be burdened by debt and/or state aid repayments, Ryanair's growth could be an advantage in the attraction and retention of flight crew.

Growing airlines offer not only more recruitment opportunities, but more promotion opportunities.

Mr Wilson certainly believes that growth is positive for industrial relations at Ryanair. He summed up his message to employees while speaking at CAPA Live on 14-Jul-2021:

"Very simple message: we'll preserve the jobs and you will get pay restored over the next three to four years, and the promotions and everything will continue, and the new aircraft are coming".

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