But the agreement, signed by Branson and staff representatives, has only put off the day of reckoning for Virgin Express Ireland, the new subsidiary at the heart of the dispute.
The deal lays down a formula for soothing employee fears over the transfer of operations to Ireland, where four of the carrier's 21 Boeing 737s are based. Irish crew operations and aircraft registrations have been frozen until completion later this year of a full review of Irish operations.
Virgin Express workers will also get a new employee committee and are promised a bigger say in a new management structure starting to take shape.
The carrier's pilots led the protests against expansion in Ireland. They say it threatens their jobs and undermines Virgin's pledge to stay in Belgium. To add to the airline's worries, the Belgian Cockpit Association threw its weight behind them, and pilots at flag carrier Sabena threatened to strike if Irish crews operated on shared routes. As if that was not enough, two middle managers refused to back the airline's stance on Ireland and flirted with the rebel movement.
In an echo of a similar dispute last year, Branson, the airline's majority owner, was forced to intervene after employees appealed directly to him over the heads of the Brussels management team. After lengthy negotiations conducted not only face to face but also in the Belgian and international press - which had access to leaked documents - Branson finally thrashed out a peace deal. Ever the optimist, he refuses to accept the fault lines in the company and puts great emphasis on improving communication between the carrier's staff and managers.
But, while such consensus business practice is all the rage in Brussels, it goes against the grain of the US management team at Virgin Express, which is retreating with its tail between its legs.
The pilots did not get everything they asked for, but they can claim one major scalp: that of chief executive Jim Swigart. He will step down when his contract ends in September and return to the USA. Fellow US chairman and Virgin Express shareholder Jonathan Ornstein is back with Mesa Air in the USA, as is former vice-president of operations, Bob Brayton.
This looks like a victory for mutinous pilots. Senior management sources paint a different picture, saying that Swigart had no intention of staying beyond his contract, and blasting pilots for following an agenda set by Sabena pilots afraid of low-cost competition. They say that Virgin Express pilots can delay expansion in Ireland, but that they cannot buck the Europe-wide trend towards greater airline liberalisation. The sources add that, if Virgin cannot remain nimble, other low-cost carriers will soon steal its thunder. Significantly, another manager in the firing line, former chief operating officer Don Monteath, is installed as general manager of Virgin Express Ireland.
"What Richard is doing is setting up the review [of Irish operations] to show them how much money we are saving, so they can't say it's not a good idea," says one manager. "But, if the whole situation blows up, then we'll be back with Irish aircraft - you can bet on that."
As well as avoiding Belgian taxes and social costs, Virgin Express says Ireland offers a larger pool of available pilots, with 40 pilots hired so far. "We could never have got this many pilots in Belgium," says one manager.
Branson must be wondering how one small airline in his sprawling Virgin empire can bring so many headaches - and what lies in store for the next chief executive.
Source: Airline Business
