Although Luxair has recovered from the covid pandemic better than many European airlines, it faces immediate and medium-term challenges, the most pressing of which is an apparent breakdown in relations between management and unions. Romain Gamba-Maison Moderne

Although Luxair has recovered from the covid pandemic better than many European airlines, it faces immediate and medium-term challenges, the most pressing of which is an apparent breakdown in relations between management and unions. Romain Gamba-Maison Moderne

As hundreds of trade unionists are scheduled to march from the Glacis to the place de l’Europe on Monday morning to protest at pay and working conditions at Luxair, crucial tripartite talks will be taking place at the ministry of transport on the future of the national airline.

Three trade unions--the , and --representing staff at Luxair say that their members are being overworked as the airline returns to something like a normal schedule after the covid pandemic. They feel employees are not being compensated with improved pay in return for taking on a heavier workload.

However, the problem for those who meet on the Glacis on Monday morning to march to the transport ministry on place de l’Europe to voice those grievances, is that pay and working conditions will not be the focus of the talks going on inside the ministry.

Transport minister François Bausch has said that the priority of the discussions between the government, union representatives and the airline bosses would be the financial health of the company and whether “the employment maintenance plan (PME) is still necessary.”

The PME was in the face of the covid crisis. It involved some 265 employees taking early retirement, another 227 staff on a structural redeployment scheme and cyclical redeployment for another 157.

Between 15 and 20 people remain unemployed, while an additional 150 staff have already taken early retirement. But no one is still on the short-time working scheme. The plan was scheduled to run until the end of 2023 at a cost to the state of some €50m. The ministry has not calculated the savings that would be made by stopping the PME a year earlier than planned.

Robert Biever as mediator

While the airline faces several immediate and medium-term challenges, including a shortage of kerosene and the cost-of-living crisis that will cut into the disposable income of many households, staff disenchantment does seem to be the most urgent. Indeed, the Luxair board recognised as much when it issued a statement on Thursday saying it had invited invite also the honorary attorney general Robert Biever to mediate in discussions between airline management and the unions “to support a constructive approach”.

We have no time to lose, the staff are in a state of anxiety.
François Bausch

François Bauschtransport minister

Bausch welcomed the move. “This is a very good idea,” he said. “At the end, a report will be needed to describe the social climate within the company.” But the minister also wants to make concrete progress at Monday morning’s meeting. “We have no time to lose, the staff are in a state of anxiety,” stated Bausch. The labour ministry agrees, saying, "we will have to analyse the situation in all its details before deciding whether the measures that have already been put in place still meet the needs".

The road to recovery

The Luxair board has also recognised that workload at the airline has been higher than usual as it emerged from the impact of the covid pandemic, “to ensure production and flexibility” as required. “In this context, the entire board expressed its appreciation to all Luxair agents who helped Luxair succeed,” the statement concluded.

Indeed, Luxair has fared better post-pandemic than many European airlines even if CEO Gilles Feith admits that “prospects are still difficult”. According to the latest figures provided by Feith, the company is 20% below passenger numbers compared to 2019 on the airline, but 20% ahead in its LuxairTours package holiday arm. The airline lost €154.9m in 2020 (compared to a net result of €8m in 2019). Passenger numbers had fallen by 69.3% to 658,000. In 2021, it still recorded a net loss, albeit smaller, of €2.3 million, and carried 1.08 million passengers, almost half the number in 2019.

In 2019, the operating result was €-8.7m. In 2020 it had fallen to €-159.8m and in 2021 to €-33.7m. "This year we had a dividend of €70m, so we should have a positive net result,” Feith predicts. The company can rely on the good results of Cargolux, in which it has a 35.1% stake.

But other airlines are also facing similar post-pandemic problems with understaffing and wage freezes. Lufthansa pilots have staged a series of strikes over the summer and cabin crew in Italy from budget airlines Ryanair and Vueling will strike on 1 October.

Confidence in CEO

The Luxair board statement also included what appeared to be a vote of confidence in Feith, whose position had been the subject of media speculation. The Wort had published an article, taken up by other media, suggesting Feith was going to step down on Monday with a view to taking over the vacant position of CEO at Luxembourg airport. Bausch had also intervened to dismiss that speculation as “rumour without substance.”

“I am here to apply myself at the company", says the CEO, adding that he is “convinced” that mediation will help restore peace in the company. During the tripartite meeting, he hopes to raise awareness of the fact that "the ultimate goal is the future of Luxair". This involves finding investment and developing a business model that allows the airline to maintain the “Luxembourg model” in the face of low-cost competition. “Developing new markets to divide the fixed costs,” is the way forward, says Feith. Just last week Luxair announced it would be increasing frequency on certain routes and adding Pescara in Italy and Split in Croatia next spring.

Luxair must stand on its own two feet
Gilles Feith

Gilles FeithCEO Luxair

Reverse of wage freeze

While the unions are clear in their demands, rediscussing the 2020 PME, and in particular short-time working, is also among their objectives at the meeting. “We were faced with overstaffing and the risk of redundancy,” said LCGB trade union secretary Paul De Araujo. The situation has evolved in the right direction, but it has caused a series of other problems with regard to workload.”

However, the company no longer has any employees on short-time working. “We need a guarantee that it will stay that way,” said central secretary of the OGBL Michelle Cloos. She wants to avoid a situation like in the middle of the year, when short-time working was still in force despite the economic recovery.

The unions are also campaigning to reverse the wage freeze agreed in the PME.  “Staff have made great sacrifices. With the recovery, they expect changes in this area,” said Cloos. The collective agreement provides for one “step [up the pay scale] per year” with pay rises of “1.5 to 2%” in general. And the increases lost over three years will not, in principle, be compensated for because “a person at step 10 will not move up to step 14” in 2023.

Feith argues that the airline must “not change the model, but do more. We have converted about thirty fixed-term contracts into permanent contracts, to encourage people to change careers and come to us.” There are 16 vacancies on the company's LinkedIn page, and Luxair has also just appointed a new human resources manager.

Fleet renewal and shareholding

Other challenges for Luxair include the renewal of the airline's fleet and questions over its shareholding. An aircraft that consumes less energy would save €1.5m. To replace a 737 aircraft, the investment amounts to “hundreds of millions of euros”. However, Feith does not intend to ask for aid. “Luxair must stand on its own two feet.” In fact as direct state aid to companies is highly regulated by the EU, Bausch has also said that “it is up to the company to take charge” of any greening of its fleet.  

There is also still speculation over what will happen to the 13.14% stake in the airline owned by Banque Internationale à Luxembourg. Last April, the bank had

The state has a 39% share, but EU rules could prevent it from taking on the BiL shares if the bank does decide to sell. But both Bausch and Feith have said that the bank’s shares will not be at the heart of Monday's discussions. The remainder of the shareholding is held by state savings bank Spuerkeess (21.81%) and the Delfin holding company, with 13%.