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Ryanair, Europe’s Cut-Price Behemoth, Agrees to Recognize Pilot Unions for First Time

Ryanair, known for combining ultralow fares with charges for services, reversed a longstanding policy amid a controversy over its treatment of workers.Credit...Paulo Nunes dos Santos for The New York Times

LONDON — Ryanair, Europe’s biggest budget airline, built itself into a juggernaut by aggressively cutting costs at every opportunity. Fuel consumption was tightly controlled. Turnaround times were slashed. And, crucially, unions were banned.

Now Ryanair has been forced to change its stance on labor, as it faces a growing backlash among its ranks. The carrier on Friday officially recognized pilot unions, a move that could cut into the company’s profit and prompt a broader industry shakeout.

It is a sign that Ryanair will increasingly have to behave like its competitors, grappling with the labor costs that usually face a legacy carrier. Investors recognized the threat, with shares of the carrier falling more than 8 percent on Friday.

“It’s an acknowledgment that the fundamental core of the business model has to change and they’re going to have to start operating like a normal airline,” said Andrew Charlton, managing director of Aviation Advocacy, a consultancy.

“They are going to lose some of the extraordinary cost advantage they’ve had over every other airline.”

Ryanair is facing a fiercely competitive aviation market in Europe, one in which several airlines have collapsed or been bought in recent months. With flights sometimes as cheap as $15, an array of airlines of varying sizes have little margin for error, and any shock to the system could upend their business plans.

There are other longer-term challenges, as well. For one, Britain’s withdrawal from the European Union could curtail the freedom for airlines to fly between airports in the region.

Since its founding in 1985, Ryanair outmaneuvered its competitors. Growing from a single 15-seat aircraft flying from the south of Ireland to London’s Gatwick Airport, the airline now has more than 400 Boeing 737s, and carried more than nine million passengers last month alone.

Keeping labor costs low was a critical piece of the profit. The company has used a mix of full-time employees and independent contractors. It steadfastly refused to meet with, or recognize, any unions.

In doing so, Ryanair was able to sidestep labor regulations and social security taxes in the dozens of countries in which it operates. Its labor costs were among the lowest within its European cohorts. Other low-cost rivals followed its lead.

While pilots have pushed to unionize for years, Ryanair was able to hold off their efforts. But a scheduling disaster in recent months put Ryanair on the defensive.

After the airline messed up its fall vacation schedule for pilots, it scrambled to find replacements, saying instead that it might cut a week of vacation time. Employees, many of them independent contractors, pushed back. Ryanair ultimately had to cancel more than 20,000 flights, affecting hundreds of thousands of passengers in all.

Pilots galvanized to set up their own groups across Europe for negotiating with the company. They demanded collective bargaining and more secure contracts.

Ryanair resisted for months. It was concerned that rivals were trying to leverage the flight cancellations to force it to negotiate with unions and, potentially, push its labor costs higher. Ryanair’s chief executive, Michael O’Leary, argued that airline unions and competitors were trying to “demean and disparage our collective success.”

As the busy holiday travel season approached, pilots ultimately threatened to strike. Ryanair had to relent.

It invited unions in Britain, Germany, Ireland, Italy, Portugal and Spain to talks.

“Christmas flights are very important to our customers, and we wish to remove any worry or concern that they may be disrupted by pilot industrial action next week,” Mr. O’Leary said in a statement.

“Recognizing unions will be a significant change for Ryanair, but we have delivered radical change before,” he added.

The airline also maintained that it would acknowledge only representatives from Ryanair and that it would not “engage with pilots who fly for competitor airlines in Ireland or elsewhere.”

Ryanair called for the unions to cancel any potential strikes. It was not immediately clear whether a planned walkout in Ryanair’s home country, Ireland, would go ahead.

British and Italian unions welcomed the airline’s move, but others were more cautious. One question that remained was whether Ryanair would negotiate only with directly employed pilots, or whether it would be willing to discuss the conditions of contractor pilots and cabin crews as well.

“Ryanair believed at the beginning that it could work ignoring the rights of its employees, and now, faced with the evidence of reality, it is opening its eyes,” Antonio Piras, the general secretary of the Italian union Fit-Cisl, said in a statement. Anpac, another Italian union, on Friday suspended a four-hour strike planned for the afternoon and welcomed Ryanair’s openness to negotiations.

Impact, an Irish union, declined to comment except to say that it had spoken to Ryanair management and was seeking further meetings. The British Airline Pilots Association said it accepted Ryanair’s offer to enter discussions.

Alessandra Cocca, a 40-year-old former flight attendant for Ryanair who sued the company over her dismissal and work conditions, called it an “epic, epic win” that showed that the airline could be put under pressure.

But she conceded that it would still be difficult for cabin crew members to fight for better conditions. “They are more frightened than pilots because they feel like numbers,” Ms. Cocca said. “They are not people, they feel like numbers and can easily be substituted.”

Follow Amie Tsang on Twitter: @amietsang.

A version of this article appears in print on  , Section B, Page 1 of the New York edition with the headline: Threat of Strike Forces Ryanair To Recognize Pilots’ Unions. Order Reprints | Today’s Paper | Subscribe

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