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The Silent Report and Shadow Report

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The Silent Report and Shadow Report Silent and Shadow Report: RyanAir Silent Report & 1 Shadow Report Alice Hamling, Christopher Kololian, Zoe Lloyd, Zoe Yuill (Honours Undergraduates, University of St Andrews, 2006/7) Introduction By law all UK public companies are required to disclose their year-on-year financial performance in an accurate and timely manner. Whether or not these companies disclose their social and environmental performance is a decision left to their respective management teams. Despite the steadily-increasing popularity of social and environmental reporting, most large UK firms still avoid the task. Reasons cited by management teams for a lack of social and environmental reporting include cost, time, confidentiality and inexperience (Gray et al, Approaches to Practice: The Silent Accounts Project, 2006). The purpose of this exercise is to paint a more comprehensive picture of a non-reporting company’s social and environmental record. This is done through the use of two separate tools, a Silent Account and a Shadow Account. The Silent Account extracts excerpts from the selected company’s annual report and other public disclosures to show what a social and environmental report might look like from the company’s perspective. The Shadow Account is a compilation of various pieces of information found in the public domain that shows what the company’s social and environment report might look like from the public’s perspective. The choice of the company on which the reports would focus on was a group decision based on a number of factors. The company had to be a publicly-traded company, ideally based in the UK or EU, that did not already issue a formal social and environmental report. It was also decided that the company had to operate in an industry that was of notable contemporary importance. This would not only facilitate 1 November 2006 Silent and Shadow Report: RyanAir the process of collecting data, but it would also give the group the opportunity to potentially contribute valuable work to the field of corporate social responsibility as well as the industry of the selected company. For these reasons, the company eventually selected by the group for a Silent Account and Shadow Account report was the Irish commercial airliner Ryanair. Ryanair is a public company whose shares are inter-listed on the Irish Stock Exchange and NASDAQ in the United States. The company issues an annual financial report as well as quarterly financial updates. It does not issue a formal social and environmental report, but it does discuss both subject matters in its annual report and on its company website (www.ryanair.com). The topic of commercial aviation is currently a contentious topic in regards to its impact on the environment. The combination of carbon dioxide emissions from aircrafts and the required infrastructural expansion of airports to support ever-increasing passenger numbers has led many people to seek improved reporting and accountability on the part of the aviation industry2. For the aforementioned reasons Ryanair was deemed a suitable company on which to focus the report. The purpose of this report is not to show Ryanair in a “good light” or “bad light”, but merely to organise the existing pool of information on the company’s social and environmental practices into something that might resemble a formal report. The Silent Account is somewhat of a cut-and-paste exercise of Ryanair’s public disclosures, which leaves little room for the inclusion of the researcher’s bias. The Shadow Account, however, does open itself up to the possibility of editorial influence simply by its very nature. The impartiality of the Shadow Account depends largely on the diversity of the researcher’s sources of information. The group has made a conscious effort to avoid bias in the Shadow Account by seeking data from a large and diverse group of sources. 2 “Worldwide, passenger traffic is expected to grow by about 5% per annum and air freight by over 6% per annum. The world fleet of aircraft is expected to double by 2020.” http://www.aef.org.uk/campaigns Silent and Shadow Report: RyanAir Silent Report and Shadow Report Silent Report Shadow Social Report The following silent report has been compiled directly from information provided in The following shadow report has been compiled with information directly available Ryanair’s corporate reports and other documents issued directly from the company if on the public domain. not stated otherwise. In addition to this, within the environmental section, headings from British Airways have also been incorporated to highlight areas were one would expect reporting. British Airways uses the GRI guidelines in compiling environmental reports and so is considered an appropriate benchmark. Mission and Policy Statements Mission and Policy Statements N/A Ryanair’s objective is to firmly establish itself as Europe’s leading low-fares scheduled passenger airline through continued improvements and expanded offerings of its low-fares service. Ryanair aims to offer low fares that generate increased passenger traffic while maintaining a continuous focus on cost-containment and operating efficiencies. Silent and Shadow Report: RyanAir Employment Report On the 31st of March 2006, Ryanair was employing 3,453 people. This number was an increase from 2,717 the previous year. The increase in staff numbers was attributed to the expansion of the aircraft fleet and the growth of the company. Staff Policy Staff Policy Ryanair’s cabin crew must complete a 5-week training course costing £1400, which Dispatches, a channel four documentary programme filmed in 2006, interviewed they must fund themselves. After successfully completing cabin crew training with Ryanair employees who reported being unhappy with the Cabin crew-training course. one of the three approved training schools, Cabin Crew agencies can offer a fixed They complained that the training course was all geared towards passing an exam and term contract for 3 years with a Cabin Crew agency, whom are contracted to supply not about passenger safety. They were also unhappy about having to pay £25 per cabin crew to Ryanair. They automatically receive travel benefits upon employment month to wear the Ryanair uniform. with Ryanair. After 12 months on an agency contract, high performing cabin crew are likely to have the opportunity to go on a Ryanair contract. This includes a pay rise, Pilots are legally only allowed to work 900 hours in a year, and only 100 every share options and increased staff travel benefits. Employees are also eligible for month. Some pilots from Ryanair reported that they are asked to work 99.9 hours a promotion as a Customer Service Supervisor. In this role employees have more month and the remaining 0.9 hours are sometimes used for an ‘emergency’ flight responsibility (managing a team of 3) and receive increased pay. which takes them over the legal requirements (Channel 4, Dispatches, Feb. 2006). Ryanair requires a 5-year employment history a background check and a reference At Ryanair there are no planned overnights. If cabin crew are based at Rome- from each new employee. In the Dispatches programme some new employees Ciampino they will start and end their day at Rome-Ciampino, barring technical reported that they had faked references from fellow employees they had only known problems or exceptional circumstances. for a few weeks. They also reported that it was taking months for background checks Ryanair Pilots enjoy a stable 5 on, 4 off roster pattern comprising a week of early to come through. shifts followed by a week of late shifts. This offers Pilots fixed days off and an ability Ryanair claims it is not anti-trade union, it is pro-employee. However, employees in to plan their time off which is unique in aviation. Rosters are published 4 weeks in Italy and Spain are striking because Ryanair refuses to talk to their ITF affiliated advance. union (International Transport Worker’s Federation, Sept, 2004). "Joint action by unions across Europe is a reaction to the company's appalling treatment of workers. The O'Leary virus of disrespect for workers and passengers has spread throughout Europe - and there will be Europe-wide consequences", said Ingo Marowsky of the International Transport Workers Federation. Silent and Shadow Report: RyanAir Remuneration Remuneration Outstanding Earnings Potential Cabin crew work 10 hour shifts providing there are no delays on their flights, 5/6 Ryanair Pilots are recognised as the best paid short haul pilots in Europe. Senior days in a row. Their pay works out at just £14 one way for a short haul flight and £19 pilots in Ryanair have excellent remuneration packages as follows: one way for a long haul flight (Channel 4, Dispatches, Feb. 2006). Pilots are offered shares in the company after one year of employment with Ryanair UK Eurozone (Channel 4, Dispatches, Feb. 2006). Captains Up to £100,000 Up to €130,000 First Officers (1,500 hrs) Up to £70,000 Up to €80,000 Cabin Crew: Excellent earnings based on efforts - approx £1,100 / €1,400 net per month (i.e. after tax) Ryanair’s average pay rose to €49,612 which is among the highest average pay in Europe and a higher figure than any other major European airline. Pensions Pensions No information found on pensions, however there is an option of buying shares. N/A Ryan Air operates a share options scheme which has so far delivered individual gains of over €250,000 to Ryanair pilots since they floated on the Stock Exchange in 1997. Dividend Policy Since its organization as the holding company for Ryanair in 1996, Ryanair Holdings has not declared or paid dividends on its Ordinary Shares. Ryanair Holdings anticipates, for the foreseeable future, that it will retain any future earnings in order to fund the business operations of the Company, including the acquisition of additional aircraft needed for Ryanair’s planned entry into new markets and its expansion of its existing service, as well as replacement aircraft for its current fleet.
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