European airline Ryanair (NASDAQ: RYAAY) reported on Monday that due to higher fuel costs, rising wages, and strikes from pilots and regional air traffic controllers caused its first quarter profit to drop by 20% from last year. The Company reported that strikes by regional air traffic controllers forced the airline to cancel over 2,500 trips in the first quarter.
“Ryanair is now commencing negotiations on CLA’s for over 66% of its people in its major markets of Italy, the UK and Germany. Ryanair hopes that the cabin crew unions in Spain, Portugal and Belgium will soon follow this example by engaging in negotiations with Ryanair rather than disrupting Ryanair customers by going on unnecessary strikes,” the Company said in a statement.
Ryanair has been increasing its pay to pilots after recognizing the rights of unions to negotiate on their behalf for the first time in December. Staff costs raised 34% over 3 months, ending on June 30th.
Employees for the Company have planned strikes for this week, with pilots planning to go on strike in Ireland on Tuesday, and cabin crew in Spain, Portugal, and Belgium will go on strike Wednesday and Thursday.
“We expect further strikes over the peak summer period as we are not prepared to concede to unreasonable demands that will compromise either our low fares or our highly efficient model,” the Company said in its earnings statement.
Ryanair reported a 9% increase in sales for the first quarter, but margins dropped to 15% from 21%. Increased oil prices raised fuel costs by 23% to USD 740 Million from the previous year.