September 11, 2014 / 8:35 AM / in 3 years

Austrian Airlines dealt setback by EU court ruling

VIENNA (Reuters) - The European Court of Justice (ECJ) ruled on Thursday that collective wage agreements also apply to labour contracts after a transfer of operations, Austrian Airlines (AUA) said, in what appeared to be a setback to its cost-cutting plans.

German airline Lufthansa aircrafts are parked during a pilots' strike at Munich's airport on September 10, 2014. REUTERS/Michaela Rehle

The ruling addressed a dispute over whether AUA, owned by Germany’s Lufthansa (LHAG.DE), could unilaterally cancel a previous labour agreement when it transferred its flight operations to its lower-cost Tyrolean Airways unit in 2012.

“The ECJ holds the opinion that the term ‘working conditions stipulated in a collective wage agreement’ contained in the EU Transfers of Undertakings Directive also apply to the working conditions of a collective wage agreement terminated during the transfer of operations,” AUA said in an emailed statement.

The transfer of about 2,000 pilots and flight attendants to Tyrolean, where contracts are less generous, was a key element of restructuring the loss-making Austrian Airlines embarked on after its 2009 takeover by Lufthansa from the Austrian state.

Tyrolean staff now work according to their previous pay deals, while the more generous Austrian Airlines pay has been frozen.

The airline’s works council wants the basis for talks to be the old Austrian Airlines collective wage agreement, while the company wants to negotiate on the basis of the less-generous Tyrolean contracts.

The transfer of operations to Tyrolean is also being assessed in another case at a Vienna court.

“Austrian Airlines expects the court proceedings to be resumed due to the decision made by the ECJ, and maintains its legal standpoint that the transfer of flight operations to Tyrolean was lawful,” the airline said.

Reporting by Shadia Nasralla; Editing by Michael Shields and David Clarke

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