JP Morgan cuts estimates for Ryanair as pilots form union to strengthen position

On Monday, JP Morgan Cazenove said that as a result of Ryanair's decision to cancel more than 50 flights per day on 17 September the investment bank had cut the low-cost carrier's net income estimates for fiscal years 2018 and 2019 by 5%

JP Morgan said that while it was encouraged by Ryanair choosing to abandon its bid for Alitalia in support of refocusing attention on the company's core business model, it still had a significant amount of work ahead of it to fully restore its reputation as the airline looked to reduce the risk of further cancellations while ensuring punctuality, stimulating demand and compensating inconvenienced passengers.

Nonetheless, while the cancellations would reduce its near-term traffic targets, they would do very little in terms of long-term damage.

The same was true of the impact to Ryanair's bottom line in the short-term, with fiscal year 2018 earnings now seen just 1% below the midpoint of the firm's unchanged guidance.

Also for 2018, the analysts revised their estimate for Ryanair's revenues from €7.04bn to €6.92bn and their forecast for earnings per share from 1.21p to 1.18p.

PILOTS UNION

Also on Monday, Ryanair pilots banded together to form an unofficial trade union as a result of the Dublin-based company's most recent "mess-up", which lead to the cancellations in the first place.

A letter circulated among Ryanair pilots said they were planning to coordinate against the airline's strategy of negotiating separately with employee representative committees and instead chose to form a central committee aimed at increasing their bargaining power.

According to a letter from the committee to pilots, it was set up to "oppose the longstanding strategy of divide and conquer that Ryanair has applied in its dealing with pilots."

"To overthrow this structure will require [an] immense force of will, stamina and commitment from every pilot," the letter read. "It is entirely possible that things will get worse before they get any better. Expect management to fight any change by all means available to them. There will be casualties."

The letter added, "To paraphrase Churchill: Let us make sure future colleagues look back and say: 'This was their finest hour.'"