AUA turnaround unlikely despite austerity accord

Austrian Airlines (AUA) is not expected to make it into the black this year despite the recent agreement between bosses and works council chiefs.

The struggling airline’s executive board agreed with works committee leaders to cut pilots’ wages by 25 per cent on average soon. The AUA pilots’ representatives managed to avoid an enforced change to contracts as those of Tyrolean Airways pilots. Tyrolean Airways was established in 1978, 21 years after AUA started operating. However, such a move is still possible if a majority of pilots and cabin crew members reject the settlement between AUA heads and the works committee.

Business newspapers report today (Thurs) that aviation experts do not think that AUA will manage a turnaround this year. But the airline has the chance to get back in the black in 2013, according to analysts. AUA suffered an operative loss of 59.4 million Euros in 2011. AUA CEO Jaan Albrecht defended the upcoming salary cuts as “vital” for AUA’s future. He warned from letting the carrier “crash against the wall” but also stressed he was determined that there was a bright future ahead for the tradition-rich airline.

The settlement of negotiators representing the executive board and leaders of AUA’s board personnel works committee emerged on Tuesday evening when works councillors sent an e-mail to the 1,500 pilots, stewards and stewardesses. In the message, they appealed on employees to give the green light to all details of the agreement. Around 50 pilots recently left the company because of the planned wage cuts, according to reports.

The deal between AUA bosses and works council officials also means changes to the working routine of Tyrolean Airways pilots. Negotiators agreed to cancel a clause which used to keep pilots of the regional carrier to operate planes with more than 110 passengers. Most aspects of the upcoming contract reform will affect pilots of AUA.

Many of the pilots will be stripped of the right to receive 60 per cent of their incomes after retirement. AUA will also stop to pay 39 monthly salaries to pilots hired before 2004 who decide to leave the firm. Furthermore, pilots’ incomes will no longer rise automatically every other year. They also fear not being compensated for rising inflation rates any longer. This detail is seen as the most disputed point of the agreement between Albrecht and works councillors.

Meanwhile, Emirates manager Thierry Antinori rejected allegations that he was offering special contracts to pilots of AUA – which had more than 11 million customers last year – interested in joining his airline. The former Lufthansa executive  board member said every AUA pilot interested in taking on new challenges was welcome to hand in an application. Antinori said it was not true that the Arabian carrier created special job offers for pilots of AUA. He said: “We receive a large number of applications from pilots from all over the world.”