Ryanair Holdings (OTCMKT:RYAOF) and CEO Michael O’Leary Sued in New York for Stock Fraud
Ryanair Holdings Plc (OTCMKT:RYAOF) and CEO Michael O’Leary have been sued in New York by a shareholder that said Europe’s largest airline defrauded investors and inflated its share price by overstating its ability to manage labor relations and keep costs down.
The complaint was filed Tuesday night in the US District Court in Manhattan by an Alabama pension fund, seeking class-action status and damages for investors in Ryanair’s American ADS’s (depository shares) from 30 May 2017 to 28 September 2018.
Ryanair did not immediately respond on Wednesday to requests for comment.
The complaint said Ryanair misled investors in regulatory filings and conference calls about its labor stability, including “industry leading” contracts with pilots and cabin crews, and its positive impact on operations.
It said the truth came out as labor unrest forced the Dublin-based low-cost carrier last December to recognize unions for the first time, and led this summer to costly strikes that stranded thousands of passengers in several countries.
“Unbeknownst to investors, the company’s historical profit growth was built on an undisclosed and unsustainable foundation of worker exploitation and employee turnover,” the complaint said. “The decline in the price of Ryanair ADSs was the direct result of the nature and extent of defendants’ fraud finally being revealed to investors and the market.”
Ryanair cited labor issues on 1 October when it cut its full-year profit forecast. Its share price closed that day more than 33% below its level in mid-March 2018
Mr/ O’Leary, Ryanair’s CEO since Y 1994, said last month he hoped to reach labor agreements with all of the carrier’s major unions before Christmas.
ADSs on 30 June accounted for 43.7% of Ryanair’s issued ordinary shares, assuming all were converted into ordinary shares, the company has said.
Ryanair’s market value is roughly $16-B, according to the data.
The lawsuit was filed by the City of Birmingham Firemen’s and Policemen’s Supplemental Pension System. Its law firm Robbins Geller Rudman & Dowd specializes in securities fraud.
It is common for shareholders to sue companies in the United States after what they consider unexpected share price declines.
The case is City of Birmingham Firemen’s and Policemen’s Supplemental Pension System v Ryanair Holdings Plc, U.S. District Court, Southern District of New York, No. 18-10330.
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