Loss-making Austrian Airlines will shift the contracts of pilots and flight attendants to a lower-cost subsidiary after last-ditch negotiations with on-board staff collapsed.
It marks a return to Austrian's strategy to pool its flight operations with those of Tyrolean Airways, whose employment terms are less generous. Around 600 pilots and 1,500 flight attendants are affected by the move which takes effect in July.
"The executive board views this as a measure which will secure the future of Austrian Airlines, as the step will result in automatic salary increases being abolished, and a modern collective agreement introduced," it said in a statement after talks with union representatives broke down.
The move, which the company hopes will save EUR€45 million (USD$59.6 million) a year, is poised to trigger what could be a lengthy legal battle with workers.