Norwegian suffers £9m loss from strike threats over its labour practices
The low cost airline, Norwegian Air Shuttle, has now started operating low-cost long-haul flights from Gatwick to the US, said the cost of strikes earlier in the year has been around £9 million. The threat of strike action, from one of Europe’s largest labour unions Parat, came after Norwegian announced it wanted to split the Danish and Norwegian cabin staff into 2 separate companies – Cabin Services Norway and Cabin Services Denmark. Unions feared the new agreement would weaken its members’ negotiating power and threaten accrued wages and benefits. Norwegian’s second quarter financial results for 2014 showed a pre-tax loss of £12.9 million, with revenues rising to around £472 million from around £377 million a year earlier. It claims an 80% load factor on its flights. There have been complaints about Norwegian trying to bypass Norway’s strict labour laws, avoiding high labour costs and enabling it to employ cheaper Thai workers. There had been uncertainty about whether the US would grant the airline a permanent licence to operate there, for fears it would “dodge international labour rules”.
.
Tweet
Norwegian suffers £9m loss from strike threats
Strike threats from labour union Parat earlier this yearcost Norwegian Air Shuttle more than £9 million, the airline has announced.
The carrier, which this month started operating low-cost long-haul flights from Gatwick to the US, said the results were influenced by “significant” one-off costs, a weak Norwegian currency, high oil prices and the Parat strike.
The threat of strike action, from one of Europe’s largest labour unions, came after Norwegian announced it wanted to split the Danish and Norwegian cabin staff into two separate companies – Cabin Services Norway and Cabin Services Denmark.
Unions feared the new agreement would weaken its members’ negotiating power and threaten accrued wages and benefits.
Norwegian’s second quarter financial results for 2014 showed a pre-tax loss of £12.9 million, with revenues rising to around £472 million from around £377 million a year earlier.
The airline said despite its strong capacity growth, the company “was still filling seats”. The load factor was 80 per cent, up three percentage points from the same quarter last year, which is a record high for a second quarter.
Norwegian’s CEO Bjorn Kjos, said: “This quarter, we see clear results of the company’s strategy. Over the past year, we have established a long-haul operation and we have opened several new bases in Europe.
“More than half of our 417 routes are currently operated outside Norway, which illustrates a significant international expansion over the past year.”
“Both wet lease of aircraft and the strike from labour union Parat has affected the result significantly. There is also a high competitive pressure, particularly in the Scandinavian market,” he said.
http://buyingbusinesstravel.com/news/1722816-norwegian-suffers-%C2%A39m-loss-strike-threats
.
.
US moves to block Norwegian’s transatlantic plans
Washington has approved legislation that could prevent Norwegian Air from operating flights to the US because of concerns the airline will “dodge international labour rules”.
It still has to gain Senate approval before becoming law.
Norwegian is currently awaiting the US Department of Transportation’s decision for a foreign air carrier permit. However, if the legislation is approved Norwegian could be blocked from serving the US.
Strong opposition
Some of Europe’s largest workers’ unions have been strongly opposed to Norwegian Air gaining a licence that will enable the airline to operate from its Irish base in Dublin.
The unions have said if a licence is granted it will create “unfair competition with EU and US carriers” and “threaten to degrade labour standards” both in Europe and the US, by hiring cheap Asian workers.
The airline deny this claim and said the move is to gain access to future traffic rights to and from the EU.
“Congress has a responsibility to make sure that US airlines do business in a fair marketplace and that the US government’s transportation funds don’t hand an advantage to foreign airlines that try to cheat the system,” said Captain Lee Moak, president of the pilots union.
“We urge the US Senate to support the US House position and send a clear signal that Congress is committed to ensuring US airlines and their employees do business on a level playing field,” he added.
Superior wages
Norwegian Air spokesman Lasse Sandaker-Nielsen has called the criticism of low wages and a lack of safety “slanderous.”
“Norwegian has already employed more than 300 American cabin crew members in Fort Lauderdale and New York, and is currently recruiting New York-based pilots for its 787 Dreamliner operation.
“Norwegian received almost 6,000 applicants for its 300 cabin crew positions. The company’s American employees say that their wages and benefits are superior to those of their counterparts at US airlines.
“Pilots flying intercontinentally have a global pay scale, which means that a long-haul pilot based in Norway makes about the same as a long-haul pilot based in Asia or the US.”
The airline added: “It is important to stress that Ireland was not chosen because the country has specific rules and regulations that allow the use of American or Asian crew, like some politicians and unions have claimed.
“The fact is that Norwegian could have based its long-haul company in any other European country and still used American and Asian crew, the way several other European airlines have been operating for years.”
In March NAI CEO Bjoern Kjos said the delay in gaining the permanent licence has led to it suspending talks to purchase 20 Dreamliner planes from Boeing.
http://buyingbusinesstravel.com/news/1222631-us-moves-block-norwegian%E2%80%99s-transatlantic-plans
.
.
.
Norwegian Air revenues hit by strike threats
Norwegian Air’s CEO Bjorn Kjos has admitted strike threats from one of the country’s major unions damaged business for the month of May.
The airline carried 2.1 million passengers last month, an increase of 12 per cent compared to the same month last year, however strike threats from union Parat affected the company’s revenues and bookings.
Norwegian said many customers in Norway and Denmark “refrained from booking flights” due to fear of industrial action.
The load factor was 77 per cent, the same as May 2013.
“May was an atypical month where the strike threats from the labour union Parat affected our company considerably through fewer bookings and consequently lower revenues,” said Kjos.
“On the positive side, I’m pleased that we keep attracting new customers, particularly in new markets outside Scandinavia.”
The threat of strike action comes after Norwegian announced it wanted to split the Danish and Norwegian cabin staff into two separate companies – Cabin Services Norway and Cabin Services Denmark.
Unions fear the new agreement would weaken its members’ negotiating power and threaten accrued wages and benefits.
Irish base
Last month (May 27) Norwegian faced renewed calls from some of Europe’s largest unions to deny the airline’s application for a foreign air carrier permit.
Norwegian wants the licence so it can operate from its Irish base in Dublin and “gain access to future traffic rights to and from the EU”.
Unions refute this claim and believe Norwegian wants the foreign licence so it can “circumvent worker protections by evading international labour laws”.
The US Department of Transport is currently considering its decision. The airline has admitted the delay in gaining the permanent licence has led to itsuspending talks to purchase 20 Dreamliner planes from Boeing.
http://buyingbusinesstravel.com/news/0522598-norwegian-air-revenues-hit-strike-threats
.
.
Norwegian’s EU plans under threat
Norwegian Air’s plans to build an international long-haul airline in Ireland may be scrapped if it fails to gain backing from the U.S Department of Transportation (DOT).
Norwegian launched flights to the US and Bangkok from its Nordic base last year, and in February gained an operating licence, enabling it to base the business in the EU, where it can operate under more favourable conditions and take advantage of the Open Skies trade agreement with the US.
The airline is currently operating under a temporary licence and is awaiting a decision from DOT for a permanent licence.
The application for a permanent licence has been fiercely contested by some parts of the industry. They claim the main reason for the move is to bypass Norway’s strict labour laws, avoiding high labour costs and enabling it to employ cheaper Thai workers.
Norwegian deny this claim and said the move is to gain access to future traffic rights to and from the EU.
“An additional delay – or in the worst case, a negative decision by the US DOT – may regrettably force us to reverse our commitment to build an international long-haul airline in Ireland,” Norwegian Air chief executive Bjoern Kjos said.
Kjos also confirmed the delay in gaining the permanent licence has led to it suspending talks to purchase 20 Dreamliner planes from Boeing.
“Unfortunately, the delay in the DOT process has given us no other choice than to put our ongoing negotiations with Boeing to purchase 20 new 787-9 Dreamliner aircraft – due to be registered in Ireland – on hold until Norwegian Air International’s future in the US has been decided.”
http://buyingbusinesstravel.com/news/2922364-norwegian%E2%80%99s-eu-plans-under-threat
.
.
.
.