Ryanair unveiled its results for the three months to the end of June on Monday, July 22. These showed a 20% reduction in after-tax profits to €319m. This was despite a 7% increase in passenger numbers to 37.6 million. The share price fell 5% on the results. The airline blamed the profit dip on lower fares - Ryanair's average fare for the quarter was down 4% to €38.68 - plus an early Easter along with higher fuel and pilot costs.
However, it was the airline's continuing industrial relations difficulties rather than the lacklustre first-quarter results that has kept Ryanair in the headlines. There has been another one-day strike by Irish directly-employed pilots last Tuesday, while cabin crew in Portugal, Italy, Spain and Belgium walked off the job on Wednesday.
And there's more to come. The Irish pilots are threatening a further strike on Friday, the opening day of the Republic's August bank holiday weekend.
Ryanair's response has been typically robust, with the airline announcing that it was switching six of the 30 aircraft currently operating out of Dublin Airport to Poland next winter and issuing protective notice to 300 of its Dublin-based staff - 100 pilots and 200 cabin crew.
The airline claims that its staff are considerably better paid than those of most competitor airlines. According to Ryanair, its captains earn up to €200,000 a year, its pilots are paid up to 20% more than those of other airlines such as Norwegian and Jet2, while its cabin crew "earn up to €40,000".
All of this may well be so, but as the old saying goes: "When you're explaining, you're losing."
Ever since it recognised trade unions last December in the wake of the rostering fiasco that forced it to cancel 20,000 flights and ruined the travel plans of over 400,000 passengers, Ryanair has been on the back foot. It finds itself having to deal with trade unions for the first time and the transition is proving to be a difficult one for the airline.
This is despite conceding a 20% pay increase to its pilots and a 3% increase to other staff. Staff costs rose by 34% to almost €245m in the first quarter. Even when the impact of the 7% increase in passenger numbers is filtered out, the average labour cost for each passenger flown rose by almost 25% to €6.51.
The continuing disruption to flights caused by the seemingly endless industrial relations difficulties has inevitably focused attention on the composition of Ryanair's board and its management team.
Chairman David Bonderman, who resigned as a director of Uber in June 2017 for what were perceived to be sexist remarks, has been in situ for 22 years, while Michael O'Leary has been a Ryanair director for 30 years and chief executive for 24 years. Kyran McLaughlin of Davy, who advised Ryanair on its 1996 IPO, has been a director for 17 years. While Michael Cawley and Howard Millar joined the board in 2014 and 2015 respectively, prior to becoming directors they had both been deputy chief executives of Ryanair since 2003.
In other words, five of the 14 members of the Ryanair board have been with the company for at least 15 years, something that has attracted the ire of investor advisory groups. Prior to Ryanair's AGM last September they advised shareholders to vote against the re-election of some directors.
"The composition of the board and key board committees continues to fall short of best-practice guidelines," said Institutional Shareholder Services (ISS). "We consider the board chair (Bonderman)... to be ultimately responsible for governance failures at the company."
Pensions & Investment Research Consultants (Pirc) was also highly critical of what it considered to be governance weaknesses at the company saying that there was "insufficient independent representation" on the Ryanair board and recommending that shareholders vote against the re-election of McLaughlin, Millar and Cawley as directors.
"We are very fortunate to have a chairman with the aviation experience of David Bonderman," said Ryanair chief marketing officer Kenny Jacobs. "All shareholders would say that Michael O'Leary has been the standout chief executive of European airlines." With a majority of them having ignored the advice of ISS and Pirc and voted to re-elect all of the directors, Ryanair shareholders obviously agree.
So is this a case of an ageing board stuck in its ways and either unable or unwilling to adapt to changing circumstances?
"People who are talking about the Ryanair business model being broken are incorrect," said Goodbody Stockbrokers aviation analyst Mark Simpson. "Wages are only a small part of Ryanair's cost advantage."
Ryanair's total non-fuel costs per passenger were €27 in the first quarter of which wages were €6.51 or 24%. This compares to total non-fuel costs per passenger of €111 at Eurowings, €93 at Lufthansa, €84 at Norwegian, €51 at easyJet and €40 at Wiz. In addition to lower labour costs, Ryanair also has an enormous cost advantage over most of its rivals in airport and handling charges, ownership and maintenance, and sales and marketing.
However, as the turbulence experienced at Ryanair over the past 10 months demonstrates, managing a small non-union, insurgent airline in competition with large flag carriers is a very different proposition to managing a heavily-unionised incumbent - Ryanair expects to fly 139 million passengers in the year to March, making it Europe's largest airline in terms of passengers flown.
"Management possibly thought they could buy off the pilots by increasing remuneration. It goes further then money though, possibly too far. Restrictions on base transfer is a red line," said Merrion analyst Darren McKinley.
"This is key to Ryanair's low-cost business model and core to staff job security. The trade unions have to compromise. They need to agree terms that work for both parties for the long-term. Agreeing something this month and then having the whole thing fall apart next year does not work for a company that has long-term targets."
Ryanair has ordered 135 Boeing 737-200 aircraft and has options over a further 75 with a total list price of more than $22bn. The first of these new aircraft, which can carry 4% more passengers while burning 16% less fuel, are scheduled for delivery in the spring of next year.
The airline is relying on these larger, more economical aircraft to help achieve its target of flying 200 million passengers by the year ending March 2024. This will mean growing passenger numbers by an average of 7.5% for each of the next six years and increasing the size of the Ryanair fleet from its current 455 to 585.
This continued dash for growth almost certainly helps explain some of Ryanair's current problems. Is the constant expansion placing demands on staff that will be unsustainable with what is now a unionised workforce?
Meanwhile, Ryanair is determined to maintain the flexibility which has been the key to its growth. "The Ryanair business model is heavily dependent on a flexible labour force and a mobile fleet. It still has that at the moment… the red line is that it will not give up its low-cost advantage and productivity," said Mr McKinley.
With at least some of the trade unions not for turning and the company seemingly determined to retain flexibility, has the immovable force hit the immovable object at Ryanair?
Not necessarily. While Ryanair's recognition of trade unions has not been without incident, it has gone much more smoothly than is generally recognised.
"We are happy with the pace (of concluding agreements with the unions). We have union agreements in our three biggest markets, the UK, Italy and Germany. Once we decide to do something we pretty much get on with it. We want to make the same progress in Dublin", said Mr Jacobs.
A unionised workforce may also open up previously-closed markets to Ryanair. "Ryanair can now look to France and Scandinavia, unionised markets that were previously closed to it. The idea that union recognition is a zero-sum game for Ryanair is simply not true," said Mr Simpson.
While union recognition may not prove to be a zero-sum game for Ryanair, something may have to give for the airline to make it through the current turbulence. That something may well prove to be its 200 million passenger milestone. With both chairman and chief executive having been in position for over two decades and growing indications of investor dissatisfaction at Ryanair's corporate governance, would scrapping or postponing the 200-million passenger target result in Bonderman and/or O'Leary heading for the departures gate?