Ryanair says to face down 'laughable' pilot demands as profits rise

By Conor Humphries

DUBLIN (Reuters) - Ryanair on Monday warned it would face down what it said were "laughable demands" by pilots for conditions typical of high-cost rivals even if that meant strike disruption as Europe's largest budget carrier reported an increase in profits.

The Irish airline also warned that its competitors were being overly optimistic in their expectations for fare rises on European short-haul routes next summer and urged analysts to maintain "extreme caution" on fare forecasts.

Profits at the Irish airline increased by 12 percent in the three months to the end of December on an annual basis despite a turbulent period in which it had to deal with mass cancellations and the threat of strike action by pilots.

It said it would return 750 million euros ($933.4 million) to shareholders via a share buyback.

Ryanair averted the threat of widespread Christmas strikes by unilaterally recognising unions for the first time in its 32-year history, but it has struggled to formalise relations with unions since then and said it expected further threats during Easter.

Buoyed by strong financial results and formal agreement on recognition with its British pilots, Chief Executive Michael O'Leary said it was preparing to face down other pilot unions even if that meant localised disruption.

"We have some jurisdictions where we are getting ... laughable demands for legacy-type inefficiencies," O'Leary said referring to the pay and working conditions typical of the higher cost carriers Ryanair has undermined in recent decades with its ultra-low-cost model.

Pilots say they only want the same conditions to those at low-cost rivals such as easyJet and Norwegian Air Shuttle, and some say they will refuse the pay rise unless they get assurances it won't impact future pay talks.

Some pilots have complained of a toxic working atmosphere at the airline and a lack of trust between staff and management.

"Frankly we will never agree to those ... if we have to take strikes or disruptions in those jurisdictions, then we will take those," he said in a pre-recorded presentation to investors.

Profit after tax for the quarter was 106 million euros, up 12 percent from a year ago and slightly ahead of a consensus forecast of 101 million euros in a Ryanair poll of analysts. Revenues for optional extras such as pre-booked seats and extra bags beat expectations, while the airline increased its passenger forecast for the year to end-March to 130 million from 129 million.

Ryanair reiterated it expected to make a profit after tax of between 1.4 billion and 1.45 billion euros in its financial year, which ends on March 31, 2018, a forecast that remains unchanged since a wave of cancellations announced in September sparked the recent turmoil.

($1 = 0.8035 euros)

(Reporting by Conor Humphries; Editing by Himani Sarkar and Louise Heavens)