TEAM AER LINGUS reports that it is back in business and beginning to rebuild its third-party maintenance work, following the labour disputes which brought the Irish maintenance operation near to closure in 1994.
As part of the 1994 Aer Lingus survival plan, the TEAM workforce had been asked to accept radical changes in working practices, which the unions endorsed only under the threat of the business being put into bankruptcy.
Most of the workforce had been sent home as the dispute escalated, resulting in the closure of the third-party business and the loss of key contracts. The largest single blow came when Virgin moved its Boeing 747 maintenance work to KLM.
Following the settlement in November, workers have gradually been returning and the workforce is now up to a full complement of 1,800 employees. Some of the third-party work is also beginning to come back, says Aer Lingus.
One of the early successes has been with FedEx, which is sending in a 747 freighter for a heavy- maintenance check this month. A similar contract was lost in 1994 because of the industrial unrest.
Talks are also taking place with Virgin, which is scheduled to review a new three-year maintenance contract in June.
Aer Lingus admits that TEAM still faces an uphill struggle, with market over-capacity being estimated at around 30%. "It's an extremely tough marketplace and hourly rates continue to go down," says the company. It adds that TEAM will be aided by the new labour agreements, which include an undertaking to keep "industrial peace" while the three-year restructuring plan is implemented. Annual savings from the new agreement are being put unofficially in the region of IR£60 million ($93 million).
"TEAM will be a good company in the future, but we have to prove that we're for real now," says Aer Lingus group chairman Bernie Cahill.
He adds that restructuring has also already begun to show benefits elsewhere within the group, especially on the loss-making US routes to Boston and New York, now being served by three Airbus A330s.
"On the North Atlantic, our losses were so substantial that we considered, very seriously, withdrawing completely. Instead, we invested in new equipment - a decision which has already paid off handsomely," he says. "We have returned to profit a year ahead of schedule."
The introduction of direct A330 services to New York helped Aer Lingus report a 27% rise in passengers over mid-1994, with a 61% growth in business traffic. A fourth A330 will be leased this year, to increase capacity, Cahill confirms. He adds that the A330 has allowed the airline to "slash" fuel consumption to only one-third of what it was for the 747-100s.
Cahill says that the Dublin-London route is also on course for profitability, despite a controversial 20% cut in capacity. "It is widely known that two years ago we lost IR£12 million on that route alone, but this year we will return a profit of over IR$2 million," he said in December 1994.
Source: Flight International