Austrian Airlines 737-600. By Rob Finlayson

Loss-making Austrian Airlines (OS) and its crew union have failed to reach an agreement on plans to reduce labor costs as part of its $220 million restructuring program announced in January (ATW Daily News, Jan. 11).

“Despite intense but fair negotiations, it has proved impossible as yet to reach an agreement over the Modernization of Collective Agreements work package,” OS CEO Jaan Albrecht said during a press conference in Vienna. “The measures discussed would not have been sufficient themselves to stop the automatic increase in costs from 7% a year irrespective of the economic trend and success of the company.” Albrecht said he now has to inform the Lufthansa board that OS will begin to “transfer Austrian into (OS subsidiary) Tyrolean to reach a better cost base.” Wages at Tyrolean are about 25% lower than OS.

Group airline chief officer Stefan Lauer said OS will “leave the door open for talks with the union but March 31 will be the last day for talks.” If the two cannot reach an agreement, the integration process into Tyrolean will speed up. Lauer added that an agreement with the pilot union board will be absolutely necessary to bring Austrian back to a sustainable company.

OS said that over the past six weeks, the airline has looked at the value of every single euro in administrative divisions in an effort to cut costs by more than €100 million ($130.5 million), and find ways to increase revenue by €60 million. But it said that will not be enough to take the airline into the black in a way that will last.