Ryanair to Close Lauda Unit’s Vienna Base After Union Clash

(Bloomberg) -- Ryanair Holdings Plc’s Laudamotion unit will close its base in Vienna, following through on a threat to cut more than 300 jobs after it failed to reach a deal with unions over cost reductions.

The Austria hub, the main base for the carrier founded by the late race car driver Niki Lauda, will close on May 29, Ryanair said in a statement on Friday. Other Ryanair group airlines will operate flights to Vienna instead, David O’Brien, Lauda’s joint chief executive officer, said in an interview.

Lauda’s operations in Stuttgart, Dusseldorf and Palma de Mallorca will continue to operate, O’Brien said, while the 15 Airbus SE A320 jets based in the Austrian capital will likely be moved. The carrier blamed labor group Vida for the decision, saying that pilots and cabin crew had agreed to the terms of the deal before the union scuttled the plan.

“The tragedy of this particular situation is that our pilots in Vienna didn’t need to lose their jobs,” said O’Brien. “Today, we were hoping that we’d be planning on the resumption of services in Vienna. Now we have to work on an alternative plan.”

Chief Executive Officer Michael O’Leary has been slashing costs to deal with the coronavirus crisis that’s grounded planes of the Irish low-cost carrier along with airline fleets across the globe. He’s said he needs to slash jobs and demanded remaining staff accept pay cuts, while threatening to shut down Lauda if he can’t get costs down. Ryanair plans to restart operations from July 1 with about 40% of its usual capacity.

Poverty Line

“It became more and more apparent that Ryanair had no other goal than to shut down the Austrian base, which is a real pity,” Vida’s head of air transport, Daniel Liebhart, said in an interview with radio station Oe1. “They already have by far the cheapest wage deal, they are just putting on a show. We won’t allow wages that are below the poverty line.”

Ryanair has criticized the Austrian government for neglecting Lauda while contributing to a bail-out package for competitor Deutsche Lufthansa AG, whose pilots in Austria are also represented by Vida.

Asked about Ryanair’s demand to link the Lauda wage talks to support for Lufthansa’s Austrian Airlines, Austrian Finance Minister Gernot Bluemel on Friday said collective bargaining should stay between companies and trade unions. He added that every eligible company can apply for Austria’s coronavirus aid.

O’Leary has been a harsh critic of state-aid and has vowed to challenge the Lufthansa bailout.

The Ryanair CEO has deferred capital investments, suspended share buybacks and cut management pay, with plans to eliminate 3,000 pilot, cabin crew and office jobs across the company. Remaining staff have been asked to take a 20% salary cut.

Expenses at Lauda remained ahead of the rest of the group, and with Lufthansa’s Austrian arm set to receive some 800 million euros ($872 million) in support, the operation’s future was in doubt, the carrier said this month. Lauda plans to cap its fleet at 30 A320 jets, and is embarking on a plan to improve profitability, O’Brien said.

©2020 Bloomberg L.P.

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