NEW YORK (Reuters) - Ryanair Holdings Plc RYAAY.O and longtime Chief Executive 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.

FILE PHOTO - Ryanair CEO Michael O'Leary holds a news conference in Machelen near Brussels, Belgium October 9, 2018. REUTERS/Francois Lenoir

The complaint was filed on Tuesday night in the U.S. District Court in Manhattan by an Alabama pension fund, seeking class-action status and damages for investors in Ryanair’s American depositary shares from May 30, 2017 to Sept. 28, 2018.

In a statement on Wednesday, Dublin-based Ryanair said it will defend itself against the claims, which it called “false” and “doomed to fail.”

According to the complaint, 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.

The truth came out as labor unrest forced Ryanair last December to recognize unions for the first time, and led this summer to costly strikes that stranded thousands of passengers in several countries, the complaint said.

“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 when it cut its full-year profit forecast on Oct. 1. Its share price closed that day more than one-third below its level in mid-March.

In Wednesday’s statement, Ryanair said it has experienced “very little” labor disruption from employees, and that most flight disruptions resulted from air traffic control strikes and staff shortages, a problem common to European Union airlines.

O’Leary, Ryanair’s chief executive since 1994, said last month he hoped to reach labor agreements with all of the carrier’s major unions before Christmas.

ADSs on June 30 accounted for 43.7 percent of Ryanair’s issued ordinary shares, assuming all were converted into ordinary shares, the company has said. Ryanair’s market value is roughly $16 billion, according to Refinitiv 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.