AUA supervisory board finalises contract correction

Austrian Airlines (AUA) head Jaan Albrecht has promised that customers will not be negatively affected by the firm’s contract reform.

The supervisory board of the loss-making carrier decided yesterday (Thurs) to annul the contracts of all pilots and cabin crew employees. AUA bosses hope to save 45 million Euros a year that way. Unionists and works council leaders harshly criticised the decision. They will hold extraordinary meetings next week to debate further steps against the disputed measure. Reports have it that strikes are not planned.

Albrecht told a radio news programme this morning (Fri) that the contract changes were essential to the economic survival of AUA – which sustained operative losses of 59.4 million Euros last year. He said the measure was a vital part of his long-term strategy. Albrecht claimed that the move would raise AUA’s chances to achieve a profit in the foreseeable future.

Albrecht also dismissed fears that the significant changes and reforms could harm AUA’s daily operations. He branded a shortage of pilots as an unrealistic scenario and underlined that Tyrolean Airways co-pilots could be asked to do longer working weeks. The former Star Alliance chief explained that many of the AUA affiliate’s co-pilots were currently doing on short time contracts.

The changes do not affect AUA pilots’ current income. However, the reform means that the pilots will miss out on the automatic salary increases they used to get every other year. Especially pilots who joined AUA before 2004 work under contracts which feature many bonus regulations – and a generous financial compensation ruling if they handed in their notices.

Forty pilots already left AUA due to the recent developments which would have lowered their wages by up to 25 per cent in the long run. A works committee official claimed that another 260 were willing to quit as well. Reports have it that many of them could be hired by the numerous prospering Arabian airlines.

The controversial reform of AUA’s 600 pilots and its 1,500 stewards and stewardesses came shortly after the executive board of Lufthansa – which owns AUA – upped the pressure. Lufthansa CEO Christoph Franz warned from considering AUA as a “protected area”. Lufthansa decided last month to inject 140 million Euros into AUA to support its internal restructure – if AUA chiefs kept lowering the airline’s operative costs.

Franz argued that he was in charge of 120,000 Lufthansa Group employees. He claimed being convinced that AUA had the potential to manage a turnaround – but also warned that Lufthansa would not continue pouring money into the carrier indefinitely.

Lufthansa recently assigned Karsten Benz as third co-chief of AUA to accelerate the Viennese company’s reduction of costs. Benz worked for Lufthansa in its top-tier management before joining AUA. Lufthansa decision-makers were reportedly disappointed with the achievements of Andreas Bierwirth. He had to leave AUA’s executive board. The board now features Benz and Peter Malanik and Albrecht – who said today that he had been ensured by AUA’s juridical consultants that the contract reform was “waterproof” as far as Austrian law was regarded.