Malaysia Airlines is facing a large increase in its wages bill, which has already affected the carrier's second half financial results, after signing new pay agreements covering almost its entire workforce.
The 14,000 members of the Malaysia Airlines Employees Union (Maseu) get rises of between 20 and 26.8 per cent backdated to September last year, as well as 5 per cent annual increases until at least 1998. The airline confirms that deal alone will cost it around US$16 million a year.
On top of that comes a separate agreement with the Executive Staff Association (Mesa). Its members receive a massive 28 months' arrears after receiving a 9 per cent salary increase. MAS chairman Tan Sri Tajudin Ramli says the two deals cost the carrier US$28 million and were mainly responsible for its weaker second half performance. MAS reported net profits of US$92.9 million for the full year to March, up 54 per cent on last year, but this compares to a first half profit of US$56.5 million.
Analysts estimate the cost of the wage concessions could be as high as $35 million and suggest it will force renewed cost-cutting efforts in other areas. MAS has a total staff of 19,400.
The deal with Maseu ends a three year wrangle over a new arrangement to replace the previous collective pay agreement which expired in August 1993. Talks reached deadlock earlier this year and the matter was referred to the Industrial Court, which had been scheduled to hand down a decision at the end of June. The new agreement, effective from 1 September last year, is valid until 31 August 1998.
Tom Ballantyne
Source: Airline Business
