The Greek government and airline management have agreed a framework deal with pilots to cut flightcrew numbers as they seek to restore the fortunes of loss-making Olympic Airways.
The Greek government's plan to resurrect its foundering flag carrier has taken a large step forward after it reached an agreement in principle with the pilots' union on a formula to create a new airline called New Olympic.
The government's plan, after several years of unsuccessfully trying to privatise the carrier, will see the airline operation separated from other elements of the group, such as ground handling and maintenance, which will be sold. At a later stage, the plan envisages New Olympic also being sold.
The main concessions won by the government and airline management are a reduction in the pilot workforce from 649 to 420, some substantial changes in work rules such as pension contributions, and the transfer of pilot contracts to New Olympic, says Mike Tsigonis, general secretary of the Hellenic Airline Pilots Association (HALPA).
Under the agreement, Olympic Airways, its regional arm Olympic Aviation and charter carrier Macedonian Airlines will merge, and after two years the pilot seniority lists of the three carriers will also be merged. Talks on pilot pay scales have still to take place, but with a smaller workforce and fleet, HALPA does not expect any reduction.
"It was hard for us not to agree that this company had to be set up," says Tsigonis. "We have had to give up a lot of things and make sacrifices, but the only thing we have is the prospect for the future." Although he feels the government's September deadline to create New Olympic is ambitious, he says the business plan of a scaled-back carrier is viable. One of the government's targets is to get the carrier going before next year's Olympic Games in Athens. "With the Olympics, they have a lot of cashflow to look forward to next year," says Tsigonis.
If the pilots' deal is consummated, the carrier can move forward with a lower cost base. Pilots will represent 5% of the airline's costs - significantly lower than the Association of European Airlines average of 7%. "This is our present to the company," says Tsigonis.
MARK PILLING LONDON
Source: Airline Business
