Ryanair cabin pressure

It’s obviously the week for low-cost specialists with a controversial chief executives and reputations for poor governance and working conditions. Also back in the news is Ryanair. This time it’s because of a worker-driven governance demand: representation at board level.
Last week the union umbrella groups the International Transport Workers Federation (ITF) and the European Transport Workers Federation (ETF) wrote to Ryanair CEO Michael O’ Leary. The letter from the two groups, which have particularly strong links to Ryanair’s cabin crew, acknowledges progress made over the past two years but highlights some concerns over the new group structure. Most significantly, it calls on the company to comply with the new UK Corporate Governance Code by allowing its workforce to elect three worker directors, one each for cabin crew, pilots and ground staff. The ITF and ETF also argue that this would enable Ryanair to make its board more internationally diverse.
The request has bite. The Republic of Ireland has chosen to align with the UK’s governance regime and as such Irish public companies report in line with the Code in the same manner as UK-listed businesses. That means that Ryanair will have to report on how it seeks to engage with its workforce. The fact that representatives of that workforce have made clear their preference for representation on the board puts the company in an interesting position. To ignore the demand would seem odd, given recent industrial relations problems. And its peer group contains companies – like Lufthansa and Air France-KLM – that already have worker representation on the board.
The unions’ point about the nationality of board membership also hits home. Ryanair is long past the swashbuckling stage of its development. As much as it has always defined itself against the so-called ’legacy’ national carriers obviously it is now a major European airline, and the large majority of its revenue does not come from flights to and from Ireland. As such, it’s not obvious why the board should continue to be dominated by Irish nationals.
It’s no secret that Ryanair’s corporate governance is a concern for investors, and we are aware of at least one asset manager that has sold out because of the lack of reform. Last year Ryanair, ignored a call from unions to replace its long-time chairman David Bonderman as part of a governance overhaul and O’Leary predicted shareholders would overwhelmingly back him. In reality around a third of shareholders voted against, easily the largest vote against a chair in the ISEQ20, and Bonderman is now in the departure lounge.
Ryanair would be well advised to think carefully about how to respond this time.

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