Agreement resolves dispute at MALÉV Airlines

On taking up his position at MALÉV Airlines, the airline’s new chief executive officer made an immediate restructuring announcement. After a two-hour warning strike in the summer of 2009, pilots at MALÉV Airlines reached an agreement with the company management on a new salary structure and the company policy on no longer hiring pilots from temporary work agencies. Both the employer and trade union are satisfied with the outcome of the negotiations.

Company ownership changes

MALÉV Hungarian Airlines has experienced a turbulent time in recent years. The Hungarian registered company AirBridge Zrt. acquired 99.9% of M ALÉV in a privatisation tender in February 2007 (HU0707019I); in turn, AirBridge has been principally controlled by a Russian businessman, Boris Abramovich, the head of the former Russian airline alliance AiRUnion. Early in 2009, changes took place in this ownership structure following the bankruptcy of AiRUnion in 2008. The AirBridge shares of Mr Abramovich were transferred to Vnyesekonombank, Russia’s third largest bank. On 18 March 2009, the Russian state-owned Vneshekonombank took control of the minority stake of 49% in AirBridge, which holds the shares of the struggling MALÉV airline. The majority share of 51% remains under Hungarian private ownership.

Under this new ownership structure, the owner of the airline can accept the financing of M ALÉV in the future. Following these changes, in April 2009, Martin Gauss – a professional with almost 20 years’ experience in the European aviation sector – was appointed as the new Chief Executive Officer of M ALÉV.

New CEO announces immediate restructuring plan

The new CEO of the company started his job with a restructuring announcement. Mr Gauss claimed that, in order to survive this critical financial and economic period, the company must radically cut operating costs by 5%–8% a year and lay off 150 employees in the course of 2009. He announced that the restructuring programme would continue over the next three years with the aim of reaching a total workforce of about 1,000 workers by the end of the period (see European Restructuring Monitor factsheet).

Trade union calls warning strike

At the beginning of the summer of 2009, the Hungarian Airlines Pilots’ Association (Magyar Közforgalmi Pilóták Egyesülete, Hunalpa) organised a two-hour warning strike among pilots at the airline. Hunalpa called a work stoppage for 10 June to highlight its demands for a 30% increase in the allowances paid to pilots flying the Q400 turboprop aircraft. The Chair of Hunalpa, Tamás Óvári, emphasised that the wages of pilots flying the airline’s new Q400 aircraft had decreased by 40% due to changes in the flight route and payment structure, as well as the new flight schedule. Mr Óvári added that Hunalpa’s goal was not to ensure an additional 30% salary increase, but only to maintain the same wage level as before.

The trade union also demanded that, in future, the airline should refrain from hiring ‘external’ pilots, who now make up at least 10% of the pilots at the company, according to union data. Furthermore, the trade union calls for a predictable, seniority-based dismissal system similar to the one that had been in place in previous years.

Company rejects trade union demands

MALÉV’s management declined to fulfil the trade union’s demands, citing the current economic conditions as the main reason. The airline also added that there were no plans to hire pilots through temporary work agencies, even though some external pilots are currently working at the airline on fixed-term employment contracts until the end of the summer timetable.

Further strike activity averted as agreement reached

The next round of strike activity was finally averted as the trade union and the company management came to an agreement on the dismissal and wage systems. Formally, the strike has been suspended and will be called off if Hunalpa also signs the agreement. The company confirmed that it will not hire external pilots in the future. The main point of the new dismissal system is that the maximum number of pilots that may be dismissed must not exceed 14 at a time (out of the current 232 pilots at the airline). Moreover, dismissals should take into consideration the seniority of the pilots, which means that the company should not lay off those pilots who have been working for the airline for the longest period of time.

Outcome of negotiations considered successful

Mr Óvári evaluated the outcome of the negotiations as a success in light of the fact that the company had planned to dismiss as many as 52 pilots. The new wage structure must be implemented by MALÉV’s management by 31 December 2009.

MALÉV’s Chief Operational Officer, Géza Fehérváry, also considered the negotiations as successful from the point of view of the social partners. The main aim of the negotiations was to preserve as many jobs as possible without having a surplus of pilots. Hunalpa also accepted an outplacement principle as part of the agreement: if a pilot cannot be employed as a captain, the pilot will be required to continue working as a first officer at the airline.

Máté Komiljovics and László Neumann, Institute for Political Science, Hungarian Academy of Sciences

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