Lufthansa's Austrian Airlines breaks long labour logjam

Deal struck with 3,200 pilots and flight attendants
By Shadia Nasralla / Reuters
|labour-reporter.com|Last Updated: 10/08/2014

VIENNA (Reuters) — Austrian Airlines said it had reached a broad outline for a new collective wage agreement with pilots and flight attendants, ending years of disputes as the Lufthansa subsidiary undergoes painful cost-cutting measures.

The agreement, which will apply to around 900 pilots and 2,300 flight attendants as of Dec. 1, covers future salaries, retirement benefits and working time.

It paves the way to drop legal rows with labour and secure future investment at a time that German carrier Lufthansa is itself embroiled in a dispute with pilots over retirement benefits that has lead to several strikes.

The final text of the agreement is to be presented to staff within days, Austrian Airlines officials told reporters in a conference call on Wednesday, without giving financial details.

Under the deal, the airline will take back flight operations and thousands of employees that it had previously transferred to cheaper operator Tyrolean Airlines, the officials said.

The idea of turning Austrian into a no-frills airline or scrapping long-haul flights is not under discussion, Chief Executive Jaan Albrecht said.

"I am relieved. The agreement is the best of all the options open to Austrian Airlines. We managed just in time to prevent the possible reorganisation of the airline," Albrecht said. "The negotiating partners demonstrated a sense of responsibility."

The new accord paves the way for much-needed investments of up to 1 billion euros ($1.3 billion) for new mid-range and long-haul aircraft, for which Lufthansa is likely to chip in.

Labour officials could not immediately be reached for comment.

FOREGOING LAWSUITS

Loss-making Austrian Airlines in 2012 transferred about 2,000 pilots and flight attendants to Tyrolean, where contracts are less generous, as a key element of a restructuring following its 2009 takeover by Lufthansa from the Austrian state.

The European Court of Justice (ECJ) last month dealt a setback to its cost-cutting plans by ruling that earlier collective wage agreements still applied after the transfer.

The case was supposed to revert to an Austrian court after the ECJ ruling, but Austrian said the idea was now to halt the legal skirmishing.

As part of transferring flight operations back, Austrian Airlines said it had agreed to make exceptional payments to some of its employees. It declined to give details apart from saying that it would be able to cover the costs.

"We are convinced we will stay in the black," Heinz Lachinger, executive vice president for finance, said. "At most our uniforms should be red in the future."

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