Conflict over Olympic Airways restructuring

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In December 2003, the largely state-owned Greek airline, Olympic Airways, was restructured and preparations started for its privatisation. A new company, Olympic Airlines, has been split off and has taken over the former Olympic Airways group's flight operations. New conditions of employment are being imposed in the new company, and this has caused major discontent among cabin staff, who have been taking strike action in protest.

On 12 December 2003, Olympic Airways ceased to exist as an air carrier, after 40 years of operation, and a new company entitled Olympic Airlines took its place. This followed a decision earlier in the year by the Greek government to privatise and restructure the financially troubled Olympic Airways group, in which it is the main shareholder, in the light of the problems in aviation caused by the events of 11 September 2001 and the war in Iraq, and in an attempt to ensure the conditions for the company’s survival in the context of EU competition rules.

The Olympic restructuring and privatisation plan provides for:

• the establishment and sell-off of a new carrier, Olympic Airlines, created by merging the flight operations of Olympic Airways and other group companies, Olympic Aviation and Macedonian Airlines;
• the possibility of creating an independent ground services company from the relevant parts of the group’s companies;
• the possibility of creating a new technical support company for Olympic Airlines out of the technical functions of the old Olympic Airways;
• the possibility of creating a new training company, which will also include the pilot training school; and
• the continued existence of the old Olympic Airways as a provider of services to Olympic Airlines

The new company has its headquarters at the new Elefterios Venizelos Airport at Spata, and will solely be a flight operator, resulting from the unification of the relevant divisions of Olympic Airways and other group companies. Services supporting the flight operations of Olympic Airlines, such as ground and cargo services and technical support, are provided by the old Olympic Airways, on competitive market terms.

Olympic Airlines now employs around 1,850 workers and serves practically the same network using the same fleet as the old Olympic Airways, but its labour costs for flight operations are lower. In parallel, Olympic Airlines has acquired all the rights, assets and liabilities of the flight division of Olympic Airways, along with its trademark.

Legislative framework and employment relations

The restructuring and formation of the new company were carried out on the basis of Law 3185/2003 amending Law 2668/1998 'on regulation of matters regarding the Hellenic Posts Organisation, Olympic Airways and other provisions' (GR9804166F). The new law regulates both the economic and technical framework of the reform and the employment relations and conditions of the staff at the old and the new company.

Employees of the Olympic Airways group had previously had a special employment status. This was true in particular of the air crews at Olympic Airways, whose status was defined by a series of laws, collective agreements and informal agreements.

The regulation of employment relations for employees of the new Olympic Airlines is based mainly on the following features:

• the boards of directors of Olympic Airways and Olympic Aviation may terminate collective agreements and informal agreements covering pilots, cabin crew and flight attendants. Employees who wished to be included in the workforce of the restructured Olympic Airlines were invited to sign new individual contracts of employment with the management of the new company;
• the old works rules are abolished and new ones created; and
• a new pay scale has been created and the number of employees set at approximately 1,850.

Law 3185/2003 contains provisions ensuring respect of pilots’ pension rights, as laid down in current collective agreements and the provisions of the laws regarding people becoming eligible for pensions in 2003 and 2004. This provision made pilots’ pensions payable during 2003, before the restructuring took place. In addition, according to the new law, pilots and co-pilots at Olympic Airways and Olympic Aviation who become eligible for pensions before 31 December 2004 had to retire during 2003.

The text of Law 3185/2003 mentions that changes to employment relationships may be made only following collective bargaining as provided for in Presidential Decree 178/2002 on 'preservation of workers rights in the event of transfer of undertakings, installations or parts of installations or companies' (GR0211101N) in compliance with the relevant EU Directive. However, the change in employment relationships in the new Olympic Airlines is clearly a basic precondition for restructuring the company.

Furthermore, the text of the law includes provisions conferring the power to issue Ministerial Decisions in order to regulate works rules and pay-scale issues, so as to ensure the smooth operation of both Olympic Airlines and Olympic Airways during the transitional period.

The regulation governing the internal operation of the old Olympic Airways company before the restructuring has been repealed. In its place, Ministerial Decision 580/2003 was approved and published. It introduces a new internal regulation for Olympic Airlines air crews, supplementing individual employment contracts in the following main areas:

• regulation of working time and working conditions, by sector and by occupation, as well as regulation of pay;
• regulation of issues with regard to recruiting, transferring, posting and dismissing staff; and
• regulation of disciplinary control, promotion and annual paid leave.

Many points in the new Olympic Airlines works rules deviate from the provisions previously in force. For example:

• provision is made for continuous work over seven days and up to 56 hours a week;
• postings and transfers may be made to anywhere in Greece, since the entire territory of Greece is now considered as the place where work is provided;
• additional work may be assigned to air crews at the new company, without this being considered an unfair exercise of managerial prerogative;
• split working days (morning/evening) may be implemented, with a corresponding increase in working time; and
• there will be limits on annual holidays granted during the summer months.

Employees’ reactions

There are 17 trade union organisations and associations - all members of the Civil Aviation Trade Union Federation (OSPA) - within the Olympic Airways group, representing various occupations. The union organisations failed to take a unified stand in responses to the restructuring.

The Civil Aviation Pilots’ Union (EXPA), one of the most important union organisations at Olympic, initially disagreed with the restructuring decision and procedure, but in the end the pilots decided to approve the restructuring plan and to work in the new company by signing individual employment contracts.

By contrast, the Stewards’ and Flight Attendants’ Union (EISF) opposed the restructuring procedure, and particularly the abolition of the previous collective agreements and works rules. EISF members refused to transfer to the new company, and carried out continuous and repeated strikes. EISF collected 557 signatures on a petition sent to Olympic Airways management, the Ministries of Finance, Transport and Labour, and prospective buyers, declaring that its members were not willing to go over to Olympic Airlines. It took the position that management’s decision to abolish collective agreements was contrary to the law, and breached Presidential Decree 178/2002 on the transfer of undertakings (see above). In support of its position, it also cites an opinion of the Legal Council of State that 'the employer may not unilaterally abolish or change the employees’ individual contracts for the worse'. This opinion of the Legal Council of State deemed the attempted unilateral abolition of collective agreements to be unlawful, on the grounds that the terms and conditions of employment contained in individual employment contracts may not be changed by an employer for the worse. Therefore, collective agreements may be abolished or amended only with the employees’ consent.

The continuing confrontation and strike action by cabin crew and flight attendants have created many problems in the operation of the new Olympic Airlines. The employer has voiced strong opposition, and has even taken legal action, demanding that the strike action be declared illegal and excessive. In the opinion of management, the cabin crew and flight attendants’ action has created serious financial problems for the company, which has been forced to hire aircraft and crew and engage contract workers, which is very costly.

The basic points of disagreement between management and the cabin crew and flight attendants are as follows:

• the total paybill for cabin crew and flight attendants at Olympic Airways was EUR 23.5 million a year. Management proposes that the paybill at the new company should be EUR 19 million, but the union will not accept less than EUR 21 million;
• the new regulation provides for a possible seven-day, 53-hour week. EISF is demanding that a five-day, 40-hour week be implemented, while management’s counter-proposal is a 48-hour week; and
• on transatlantic flights, the new regulation provides for eight or nine cabin staff, depending on the season (summer or winter), while EISF proposes 10-member crews.

The Greek General Confederation of Labour (GSEE) has expressed its solidarity with the EISF strikers, stating that their labour and income rights have been violated and that collective agreements have been cancelled 'illegally.'

As regards other employees (technical, administrative and seasonal workers) who continue to work for the old Olympic Airways, which now provides ground services, they are taking a wait-and-see approach. However, given the restructuring procedure followed to date, and in view of the company’s poor financial situation, they fear that many of their rights regarding pay, social insurance and pensions will be called into question.

Commentary

The case of Olympic Airways and the uncertainty it has caused with regard to labour relations and employment once again highlight the major problems created by company restructuring and privatisations. At stake are the viability and competitiveness of Greece’s national air carrier and the maintenance of workers’ jobs and rights. (Anda Stamati, INE/GSEE)