Ryanair cuts Buzz fares and route network in half

Ryanair withdrew its threat to close down Buzz yesterday after the airline's pilots voted overwhelmingly to accept new employment contracts with the Dublin-based no-frills carrier.

However, Ryanair has stuck to its decision to axe almost half of the existing Buzz routes from Stansted and will be taking on only 170 of the 610 staff employed by the airline.

Michael O'Leary, chief executive of Ryanair, styled the deal as a "rescue" of a failing airline and brushed aside union criticisms of his brusque approach to industrial relations.

Ryanair said 90 per cent of Buzz pilots offered new jobs had accepted and would see their pay rise by 14 to 22 per cent to more than £90,000 a year. However, their flying hours will also increase by about 15 per cent a year. Of the Buzz cabin crew offered new jobs, 50 per cent have so far accepted.

Mr O'Leary said the level of acceptances was sufficient to allow Ryanair to relaunch 13 of Buzz's 24 routes from 1 May, operating increased frequencies and offering fares at half the price charged by Buzz under its previous owner, the Dutch flag carrier KLM.

He also claimed Ryanair would end up paying KLM less than the €24m (£16.2m) headline figure quoted at the time the Buzz deal was first announced in January. KLM disputed this saying the terms remained the same.

Mr O'Leary defended the decision to take on only a quarter of the Buzz workforce, saying it would have gone bust had Ryanair not stepped in. He added that Buzz lost £3m in January and flew 40 per cent fewer passengers than planned. "This is an airline that was going bankrupt quickly," he said.

He also defended himself against union criticisms of his "take-it-or leave it" approach towards Buzz staff. "Balpa [the British Airline Pilots Association] are a bit like turkeys voting for Christmas. This was not the time for a lot of nonsense and I think the pilots knew that," he said.

Ryanair has secured "substantial" discounts from the mainly French Buzz airports it will continue flying to but Mr O'Leary declined to say how big these were. Ryanair will pay statutory redundancy of one week's wages or £250 for every year of service to those Buzz staff who leave the airline at a cost to the Irish carrier of about £1m. But KLM will also pay former Buzz staff additional compensation under their old employment contracts which could cost an additional £5m to £7m.

News of the agreement with Buzz staff came as Ryanair launched a "pre-emptive strike" to encourage people to keep on flying in the event of war in Iraq by announcing the sale of a million seats for £10 one-way including all taxes and charges over the next four weeks.