(Reuters) — Ryanair Holdings PLC and longtime CEO Michael O’Leary reached a $5 million settlement in a lawsuit that accused them of defrauding shareholders by downplaying the willingness of Europe’s biggest budget airline to recognize unions.
The preliminary cash settlement was reached after mediation and was filed Wednesday in U.S. District Court in Manhattan. It requires a judge’s approval and Ryanair denied wrongdoing.
Shareholders accused Ryanair and O’Leary, its chief executive since 1994, of inflating the airline’s share price by trying to mislead them into believing it would not welcome unions, whose recognition could increase costs and reduce profits.
The lawsuit cited, among other statements, O̵7;Leary’s comment at Ryanair’s 2017 annual general meeting that hell would “freeze over” before the Dublin-based airline accepted unions.
Shareholders also questioned Ryanair’s claims that it had enough pilots and maintained excellent labor relations, when in fact it was facing a pilot shortage, and in December 2017 offered to recognize pilot unions to avert a possible strike.
Ryanair’s share price fell when its labor issues became known, causing investors losses, the lawsuit said.
In a statement, Ryanair said it welcomed the settlement and that it was “in the interests of all shareholders”.
Wednesday’s settlement covers investors in Ryanair’s US depository shares from 30 May 2017 to 28 September 2018.
The lead plaintiff is an Alabama pension fund, the City of Birmingham Firemen’s and Policemen’s Supplemental Pension System. Its lawyers can seek up to $1.5 million to cover fees and expenses, court documents show.
The case is City of Birmingham Firefighters and Police Supplementary Pension Scheme v Ryanair Holdings PLC et al.