Air NZ's handsome profit comes at the expense of its workers

Air NZ has deliberately set out to use the threat of outsourcing as leverage to try to extract concessions from the unions and this has contributed to the company's handsome profits, the Service and Food Workers Union says.

The company yesterday announced a $109 million half-year pre-tax profit and special share dividend of $105 million. The Government, as the majority shareholder, is the major beneficiary of this and will receive $83 million of this.

Meanwhile, ground-handling staff are being asked to take a $12 million cut in pay and conditions, an average of more than $7000 per fulltime staff member.

SFWU Northern Regional Secretary Jill Ovens says the company's improved profitability is largely due to cuts in labour costs in heavy engineering and aircraft cleaning services amounting to millions of dollars. It is also partly the result of increased passenger numbers.

"In short, staff are working harder and yet they are expected to take big cuts in their take-home pay," Ms Ovens says.

Air NZ claims its latest plan to outsource ground-handling services is because these services are "uncompetitive", but the SFWU says this is not the case.

"Air NZ ground-handling services have had very strong financial performance in recent years. In fact, the services have been suffering severe growing pains from four years of double-digit activity growth that was not well planned for and which resulted in significant resource shortages in both staffing levels and capital equipment," Ms Ovens says.

The SFWU has evidence that the Air NZ Board considered outsourcing as a solution to problems in ground-handling in May 2005, but rejected this on the basis that the option was not viable given the external political environment and labour market pressure.

"Their problem was that where you have a tight labour market, there is no guarantee that an outsource provider can hire competent employees at lower rates of pay," Ms Ovens says.

She says that at the time, the Board recognised that outsourcing ground-handling would not solve the problems they had identified, because it would simply result in inefficiencies being transferred to the new provider.

"Outsourcing was considered to be too risky, partly because a new owner would be likely to have a go at reducing labour costs, which could result in industrial action beyond Air NZ's control."

Ms Ovens says Air NZ management has since tried a range of labour reforms to reduce costs, including roster reviews and a 9-month process of engagement with the SFWU and EPMU that identified efficiency gains.

"In March 2006, Air NZ management came up with a plan to use outsourcing as leverage to extract concessions, including simplification of the Collective Employment Agreement [CEA]. Changes were to be executed by 'change competent leaders' within a strict time-frame and based on a clear business case. If all else failed, the plan was to threaten to outsource."

Ms Ovens says Air NZ management made a deliberate decision to implement their labour reform strategies before the end of 2006, well in advance of the next round of negotiations for the two CEAs.

"It is clear to us that the agenda for labour reform hasn't changed and that the current negotiations are a cynical attempt to avoid raising the issues at the bargaining table at a time when our members will be in a position to defend their pay and conditions."

Ms Ovens says Air NZ's preferred outcome was always to retain services in-house, but if variations to the CEAs could not be achieved, then outsourcing would be pursued before expiry of the current CEAs in June this year.

The SFWU says the business model being pursued is one that Air NZ Chief Executive Officer Rob Fyfe has followed throughout his career.

"The mantra is: cut, simplify, lay off and shrink," she says.

The result for workers has been disastrous. At ITV Digital in Britain, in May 2002, more than 1500 workers lost their jobs under Fyfe's stewardship as managing director. This came after the workers had been forced to accept an across-the-board wages freeze.

Fyfe was made redundant and, along with other colleagues who had been paid out, he unsuccessfully tried to buy the company, which was by then in liquidation.

"Is this the kind of leadership we want for our national airline?" Ms Ovens says.

ENDS

www.sfwu.org

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