Austrian Airlines has stopped the planned transition of its flight operations to regional subsidiary Tyrolean.
The airline and its unions succeeded in their final attempt to reach a compromise on cost savings. Following a meeting on Tuesday evening, the two sides agreed to suspend automatic wage increases
Following months of negotiations, Austrian’s new CEO, Jaan Albrecht, pushed through a decision by the board of directors that would have seen the transfer of pilots, cabin crew and aircraft to Tyrolean. Austrian employees would have had no wage cuts, but their pay would have been frozen until those levels were reached by the Tyrolean staff. Pay levels at the regional carrier are about 25% lower. Both sides were interested in the compromise because the transfer would have almost certainly caused legal disputes that could have made the move hard to implement.
Austrian has been losing money for many years and failed to reach its breakeven goal in 2011. Albrecht launched a €220 million ($290.4 million) savings program, which included cuts to automatic pay increases and pension relief. Parent companydecided to increase Austrian’s capital by €140 million earlier this year, but that injection was subject to the subsidiary’s reaching a competitive cost structure.