Deadline looms for Estonian Air plan

  • 2012-12-20
  • From wire reports

DOWN-SIZING: The airline’s plans to fly its traditional routes require cutting its fleet in half.

The Estonian Air Cabin Crew Union (ESSA) and Estonia’s national airline Estonian Air signed a new Collective Agreement on Dec. 14 which is valid up till the end of 2013, the company said in a statement, reports LETA. The provisions of the Collective Agreement are extended to all employees of the Department of Cabin Crew of Estonian Air, regardless of their trade union membership.

The Collective Agreement regulates work and rest time, working conditions, social guarantees, salary and relations between the airline and the Trade Union. Although the negotiations lasted for a long period, both parties confirm that the agreement enables ensuring a good working environment in the company and is a precondition to further cooperation with the employer and the union representing cabin crew members.

“The aviation market is already very competitive and will remain so in the future. It is therefore important to find a good balance between the wishes of employees and the possibilities the company can offer in order to ensure sufficient flexibility to respond to changes in the market and to continue to be competitive,” said Jan Palmer, the CEO of the airline.
“Regarding the new Collective Agreement, the work efficiency of cabin crew members will increase by up to 15 percent. At the same time we agreed to retain the wages at the level of 2008. We hope that the company is able to implement the planned reconstruction and stabilize its activities in the coming year,” noted Veiko Saga, the chairman of the board of ESSA.

Estonian Air is negotiating regarding the Collective Agreement with the Pilots Trade Association ELA and hoping to come to a mutually acceptable solution in the nearest weeks as well.

Uncertain future

Despite the agreement, Minister of Economic Affairs and Communications Juhan Parts has not ruled out the possibility that a new airline would be founded to replace Estonian Air, reports the National Broadcasting. He explained at a government press conference on Dec. 13 that this would leave the state’s hands free for issuing capital to the aviation company.

Currently, however, the government is honing its plan to request permission from the European Commission to provide state aid to Estonian Air. The request will be submitted by the Ministry of Economic Affairs and Communications before Jan. 1. Parts admitted that the process might be time-consuming and the end result is difficult to predict. If Estonia is not granted permission to provide state aid, it is likely that Estonian Air would be allowed to go bankrupt. Nonetheless, the government decided at its meeting on Dec. 13 to issue a loan of 8.3 million euros to the airline in order to guarantee flight connections to destinations that are important for Estonia.

By Feb. 28 next year, the ministry will have to present to the government an action plan and a schedule for restructuring Estonian Air. The loan funds will be taken from the reserve fund for property reform.

Waiting for a plan

Palmer was supposed to formulate a plan on what to do with excess planes at the company by the first week of December but now that has been postponed till next year, reports Postimees Online. In an interview in November, Palmer noted that the amount of money the state would have to invest in the company depends on the fate of the planes.
Estonian Air PR manager Ilona Eskelinen said earlier this month that there isn’t any action plan yet. “It is not yet known how and on what conditions we can take our fleet to the desired size. Negotiations are under way,” she said.
The company has ten planes, but it only needs five for the new strategy of flying only to its traditional destinations. Eskelinen said that the decision regarding the fate of the planes will be postponed till next year.