One could be forgiven for thinking hell has frozen over this morning. Not just because cold weather has returned, but because outspoken Ryanair CEO Michael O’Learly has capitulated, making his most significant U-turn yet. Yes, he’s finally given in and agreed to recognise his first trade union, the voice of the budget airline’s 600 UK pilots through official BALPA (British Airline Pilots Association) representation. This could represent a significant shift in the balance of power following decades of resistance.

The move is almost certainly aimed at ensuring better relationships with workers following a tough winter of industrial action and a major staff roster oversight resulted in the cancellation of thousands of flights. Undoing some of the consumer goodwill the CEO had earned recently, having softened his views and the airline’s rules, winter 2017 dented Ryanair’s image, benefited rivals and put a long-term share price uptrend in jeopardy. It also tied O’Leary’s hands by dealing his pilots a better negotiating hand in terms of their long-term fight for improved contracts (pay, rights, security etc.).

Having backed down before Christmas, pledging talks with several other national pilots unions, the question now is whether swift UK recognition means similar news is imminent from unions elsewhere in Europe, especially Ireland and Germany. That said, a muted share price reaction today suggests investors either saw this coming  eventually, or don’t foresee any major business/financial implications just yet.

Mike van Dulken, Head of Research, 30 Jan 2018