Cause for hope at Cargoloux as management and unions near agreement

© Khunaspix Dreamstime.

In a confidence boost for the airline, Cargolux’s management and unions are set to resolve their differences, while the carrier has enjoyed rising volumes in the first half of the year.

In a letter sent to the unions at the start of the month, interim president and CEO Richard Forson acknowledged that discussions surrounding the Collective Work Agreement, which was cancelled last year and has been a sticking point for the unions, “have been intense but frank”.

“The one issue …that was causing concern from the unions’ perspective were the proposed actions in the event the savings target of $12.5m … was not achieved. Therefore, to demonstrate management’s trust and faith in its employees, I have removed the requirement for such proposed actions,” he wrote.

Talking to The Loadstar, Mr Forson said: “I’m happy with the outcome. It brings a certainty to the business, and the organisation will be achieving efficiencies.”

The next step is to draft an addendum to the Collective Work Agreement, which is to be reinstated until 31 December 2014, and agreed with the unions next week. In return, the carrier is implementing a flexible pattern of working hours for ground staff, identifying and implementing other productivity and efficiency measures, and changing crew flying patterns. Mr Forson added that the target of $12.5m in savings will continue to be used as a benchmark for productivity improvements and optimisation.

Aloyse Kapweiler, aviation and logistics secretary of the LCGB union said: “The devil is in the detail. But our goal is that there are no salary cuts. It’s astonishing what can be done to optimise efficiencies and we are working on a pragmatic solution – we are not stalling.”

Mr Forson said: “I’m optimistic. We have taken the contentious issues off the table, so the staff can focus on the business rather than be distracted by other factors. It brings certainty.”

However, while relations between labour and management have thawed, Mr Kapweiler added that there was still some uncertainty hanging over the carrier in relation to a new investor, as the government attempts to sell its 35% share, bought from Qatar Airways.

“It is dragging on,” he said. “It’s never good to have this uncertainty for this period of time. We have asked the minister for more information on the discussions, but the minister says it has to be secret before it’s signed.”

Mr Forson said however that the process is underway, and management has been involved. “There will be a near-term resolution,” he revealed.

The carrier, which presented its half yearly figures to the Board on Wednesday, has also seen a rise in business. Volumes for the half year have risen 13%, and although yields have fallen since last year, the decline is less than the industry average. “We are outperforming the market,” said Mr Forson. “That is real growth and through hard work and dedication we are regaining some of the market share that was lost. We have optimised the network. One of Cargolux’s key strengths is its flexible network. And before anyone suggests we are capturing market share by dropping prices – no. You can tell from the yield.”

He added: “We have adopted a simple rule – there will be no pricing that results in a negative contribution. Provided we can fly at a positive contribution, we will do it to recoup our fixed costs.”

Cargolux has deferred delivery of one of its new 747-8Fs, which is to join the fleet in the next two to three months, while one of its 747-400s left the fleet this week for heavy maintenance, and will then be returned to its lessor. Cargolux has kept another of its 747-400s, which was due to be returned.

“Everyone is pulling capacity – we have put some in, but the load factor has not been affected,” said Mr Forson. “In fact it’s up on last year, at 68%.”

He revealed that he is revising the year’s forecast, which was expected to be a loss, but he declined to give further details, apart from noting that the carrier was ahead of budget.

“We need to continue at the same level of performance. A lot will depend on the eurozone and exports out of Asia. But the transpacific is going well. I still remain cautiously optimistic but it takes a lot of hard work. In a time of doom and gloom we’ve had a respectable performance.”

He added that there hadn’t been a particular boost from the exit of Air Cargo Germany’s capacity. “There were a few loads we carried from ACG, but no one specific airline benefited overall. It’s never nice when an airline goes – it just shows how hard it is.”