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IPE special report May 2018

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Danish pension funds dump Ryanair shares as labour dispute heats up

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Danish pension fund ATP is the latest scheme to sell its holding in Irish low-cost airline Ryanair as a dispute over whether local airline staff should be included in higher-paying Danish collective bargaining wage contracts has escalated.

ATP sold off the DKK25m (€2.4m) in Ryanair stock it held at the end of last week, a spokesman for the DKK750bn pension fund confirmed.

The exposure had been held indirectly through an external manager, he said.

The move was a business decision, he said, adding that ATP did not make the specific factors in individual investment decisions public.

At the beginning of this year, Industriens Pension decided to exclude Ryanair from its investible universe, selling off around €60,000 of the airline’s shares, which it had in a passive investment portfolio run by an external manager, a spokesman for the DKK137bn labour-market pension fund said.

“We find the management’s business practices and unwillingness to engage in dialogue very problematic,” he told IPE.

“Such behaviour also constitutes a business risk we do not want to take.”

The pension fund had tried to discuss this with Ryanair through its external ESG adviser, the spokesman said.

PensionDanmark, which manages DKK171bn of labour-market pensions money, made the decision back in September to exclude Ryanair and sold its exposure of around DKK50m then.

Jens-Christian Stougaard, director at PensionDanmark, told IPE: “The decision to exclude Ryanair was made on a basis on their unwillingness to comply with ILO (International Labour Organization) conventions 87 and 98, as well as pending trials, which can have a negative effect on the company’s business model.”

Convention 87 covers freedom of association and collective bargaining, while convention 98 deals with collective bargaining.

Stougaard said the pension fund’s service provider had had conversations with Ryanair for several years on these issues.

“Even though the company has been open to dialogue, it has not made any satisfactory changes and is not willing to change since the basis of their low-cost business is having the crew operate on Irish contracts of employment,” he said.

Ryanair only conducted collective bargaining with its employee representative committees, which deprived staff of the option of bargaining through a union, he said. 

“We prefer to stay invested and work for change, but sometimes the dialogue is not fruitful, as in the case of Ryanair,” Stougaard said.

Ryanair, meanwhile, remains defiant in the face of the pension fund divestments in Denmark.

“There are plenty of buyers out there who would be only too happy to buy these shares, which have risen by 19% since 1 January this year,” a spokesman for the company said.

“Ryanair is an Irish registered airline, and our pilots and crew operate on Irish registered aircraft in full compliance with EU law.”

He said the company had made a formal complaint to the EU Commission about the “multiple breaches by Denmark of fundamental freedoms that are protected by EU law”.

He said the mayor of Copenhagen and municipalities involved were breaking EU law by banning their staff from choosing Ryanair’s lowest-fare flights and their case for doing so was baseless.

LO, the Danish Confederation of Trade Unions, said it was now awaiting the judgment from the Labour Court to a case LO filed, which was heard on Monday.

The dispute centres around Ryanair’s refusal of the Flight Personnel Union’s request for a collective agreement for flight crew staff working on the new air base the airline announced it would set up in Kastrup Airport in Copenhagen from the end of March 2015.

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