City of Birmingham (Ala.) Firemen's and Policemen's Supplemental Pension System has filed a class-action lawsuit against Ryanair Holdings and Ryanair CEO Michael O'Leary claiming violations of federal securities laws.
The suit, filed Tuesday in U.S. District Court in New York, alleges Ryanair used "aggressive anti-employee practices," that led to labor unrest at the airline. The suit claims the firm downplayed the extent of the unrest and also hid the expected impact to its earnings results.
According to the complaint, Ryanair placed strict demands on its employees as a means of increasing profitability, such as requiring many of its employees to work as temporary contractors instead of full-time employees to reduce employee benefits and circumvent local labor laws. It also allegedly forced pilots to pay for basic training, cabin crews to cover the costs of their own uniforms and refused to cover the cost of water. At one point, the company banned employees from plugging into electrical sockets characterizing the act as stealing electricity from the company.
"When you accuse your employees of theft when they plug their phones into the walls, that's pretty extreme," said Darren J. Robbins, a partner at the law firm of Robbins Geller Rudman & Dowd LLP, who represents the $43 million Birmingham pension plan, in a phone interview.
Last year, many employees began to leave the Dublin-based airline operator, resulting "in a shortage of the skilled workers necessary to continue Ryanair's operational growth," according to the suit. Despite the departures, the suit alleges Ryanair claimed through news releases, earnings calls and other public statements that its staff was "overwhelmingly satisfied" with their pay and benefits.
After Ryanair lost a ruling in the European Court of Justice in September 2017 casting doubt on the legality of the company's use of Irish employment contracts allegedly to evade local labor laws throughout Europe, Ryanair announced it had to cancel up to 50 flights a day for several weeks, citing pilot scheduling issues.
On July 23, 2018, Ryanair disclosed a 20% decrease in quarterly profits due in part to a 34% increase in staff costs. On Oct. 1, the company revealed it could not meet its annual profit guidance because of the lost fares and ballooning costs related to strikes and flight cancellations. By market close on Oct. 1, Ryanair's stock had fallen to $80.93 a share, 36% below the high of more than $126 a share.
The amount of Ryannair shares held by the Firemen's and Policemen's Supplemental Pension System could not be learned.
Shane O'Toole, head of investor relations for Ryanair, could not be immediately reached for additional comment.