Europe’s Legacy Carriers Face Labor Issues


In the first day of a planned three-day strike by Lufthansa pilots, Europe’s largest carrier cancelled 900 flights. Over three days ,they’ll cancel 3,800 flights, infuriate some 425,000 passengers and kiss away tens of millions of euros in profit.

It’s a big walkout, one of the biggest walkouts in Lufthansa’s history, according to a company statement. A full-throated attack hitting both domestic and international flights. A dispute over pay and retirement conditions that lead to 99 percent of 5,400 pilots voting for job action.

Lufthansa, Lufthansa Cargo and budget airline Germanwings are part of the strike action.

For management teams at many of Europe’s legacy carriers, battles aren’t just with low-cost carriers, cost efficient long-haul players, expanding Gulf airlines and high-speed trains. Labor, too, is often a battleground. It’s a wrung on the spreadsheet where you pick battles big enough to matter, small enough to win.

Labor issues are current at Austrian Airlines, Air France, Aer Lingus, SAS and Finnair. Norwegian Air Shuttle is circumventing high Norwegian costs by setting up a base in Ireland with greater labor flexibility.

The Centre for Aviation reports that in the current Lufthansa dispute, management said it “had improved its pay offer to the union and would continue to provide for early retirement.” They also said, “it would no longer link salary increases to company performance.”

Over at Austrian Airlines, part of the Lufthansa Group, there’s a dispute about Austrian transferring flight operations to its subsidiary Tyrolean, taking advantage of a more favorable labor agreement. It’s now in the courts. If the transfer is not allowed, there will be another labor battle with Austrian Airlines.

Air France-KLM are restructuring their short to medium-haul routes, increasing the frequency of their low-cost, leisure market subsidiary Transavia France. Air France pilots voted for a four-day strike last month to protest the way Transavia France is pushing them out.

Air France-KLM also are reducing labor costs by using regional bases to deploy crews, implementing longer working hours and lower wages, rather than keeping everyone at Paris. Last week, a French court told Air France that labor agreements apply to all cabin crew, regardless of where they sleep.

Aer Lingus is in a dispute over an employee pension scheme that it shares with the Dublin Airport Authority. They say they’re planning a “relentless series of industrial action running through the summer and right into the autumn.”

Adding salt to this wound is the recently announced 1.52-million euro compensation Aer Lingus CEO Christoph Mueller received in 2013.

“It is ironic that Aer Lingus has chosen to increase its pension contribution to the chief executive from 25% to 40% at a time when it has continually failed to resolve the pension debacle for employees of the company,” a union spokesperson said.

At SAS, the Danish cabin crews are voting on a mediator’s proposed settlement to a labor dispute after a breakdown in negotiations between unions and the carrier.

The Tarmac’s View:  Finnair and Norwegian Air Shuttle are interesting case studies. Both want to reduce labor costs. Next to fuel, employee wages are an airlines biggest expense.

As part of its 60-million-euro cost-reducing labor agreement signed last year, Finnair is in talks to reduce its 1500 cabin crew in high-wage Finland to 540. The carrier says it might outsource the cabin staff. It’s also considering a subsidiary that would produce cabin services and sell them to Finnair. That takes some brass.

Norwegian Air Shuttle, a low-cost carrier based in high-wage Norway, is developing a long-haul network. They want a “cost-competitive labor force” and have established an Irish long-haul subsidiary, to employ crews at lower wages. Norwegian’s actions led to complaints by Scandinavian labor unions, almost leading to a pilots strike last October.


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