Strikes threaten airlines' profits amid surge in fuel prices

  • Vueling has seen pilots' action in Spain recently over the perennial disputes about low-cost working conditions and Ryanair is not immune to a similar situation

Airlines are showing increasing nervousness about the short-term outlook for their businesses as a series of labour disputes threatening to spread across the industry could merge with the negative effect of an increase in the price of oil. So far it seems only the US and Far Eastern markets have escaped the strike threats.

In Europe, Vueling has been at the centre of the first major industrial action by an airline this year in Spain, with two days of partial strikes by pilots at the end of April and two more in the first few days of May. In total 478 flights were cancelled and almost 40,000 passengers affected. Pilots' union Sepla is threatening more action later this summer, claiming that Vueling hasn't fulfilled all the obligations of its workers' agreement and that the airline pays 30 per cent less than the competition.

The same threat still hangs over Ryanair, where Sepla is trying to get the airline to match pilots' pay and conditions to Spanish standards. The company has already suffered stoppages in its divisions in Italy, Portugal, Germany and Ireland at the same time as some pilots have been lured to competitor-airline Norwegian.

Air France affected too

Another major European airline currently involved in an industrial dispute is Air France. The company has seen 13 days of stoppages since February with an average of 25 per cent of its flights being cancelled and 300 million euros in lost revenue. There are two more strike days planned and the airline's chief executive has been forced to resign.

Oil prices have risen significantly so far this year, with the price of a barrel of Brent crude, the industry reference, close to 74 US dollars, representing a 10 per cent increase on January.