Strike threat bites Air NZ
By DENISE McNABB - Independent Financial Review | Wednesday, 21 May 2008
Three international airlines have cancelled aircraft heavy maintenance work with Air New Zealand in the face of looming industrial action by nearly 1000 Air New Zealand technical operations engineers in Auckland and Christchurch.
An internal Air NZ memorandum obtained by The Independent Financial Review reports Pacific Blue, Virgin Blue and Hawaiian Airlines told Air NZ on Friday they could not risk delays resulting from industrial action.
The Engineering, Printing and Manufacturing Union and the Aviation and Marine Engineers Association served a two-week notice of strike action on the same day but were challenged by Air NZ over ambiguous wording so are refiling the notice tomorrow for strike action on Friday, June 6.
EPMU national secretary Andrew Little said yesterday the action specifically excluded third-party maintenance contracts, but the threat of uncertainty appears to have been too much for the airlines with maintenance scheduled on New Zealand soil.
The airlines have a clause in their contract allowing them to cancel contracts without recourse in the event of industrial action but it is understood they haven't had to go this far.
Virgin Blue was taking its work elsewhere by mutual agreement with Air NZ while a Hawaiian plane is returning to the United States tomorrow for alternative servicing because management said it was critical that its full fleet was available for this northern summer season.
The carrier is moving its two remaining "C-checks" in a series of aircraft back to the US, the memorandum says.
The cancelled scheduled servicing work comes at a crucial time for Air NZ's engineering division, which almost closed two years ago because the business was deemed not viable and uncompetitive.
It now has an estimated $250 million of business, some of which is jeopardised by the industrial dispute.
The engineering division was saved in 2006 when the engineers' unions and Air NZ agreed to restructuring and redundancies, resulting in a reduction of staff from 1900 to 1600, a lower cost base and new contracts.
The latest dispute comes as technical operator members of the two unions seek a 5.8% pay increase. Air NZ is offering 3.75%.
After the restructuring the engineering unit got a lease of life. Qantas renewed its engineering services contract and new contracts were won from Hawaiian Airlines (worth $45m) and from Virgin Blue (worth $54m), both for servicing the heavy maintenance of their fleets of Boeing 737 aircraft.
Virgin's New Zealand subsidiary Pacific Blue renewed its long-term servicing contract in Christchurch for a further five years.
The internal Air NZ memo is signed by the airline's general manager, technical operations Chris Nassenstein, and says the decision has serious implications for the future of the five-year Hawaiian contract, still in its first year.
"More Hawaiian aircraft are due in Auckland in September but forcing Hawaiian to build a relationship with another supplier at this time puts the future of this contract at risk," he wrote.
Nassenstein said Pacific Blue had also cancelled its heavy maintenance checks at the Christchurch base. These would now be carried out by a maintenance and repair organisation in Australia.
The cancellation appeared to have caught Pacific Blue's commercial manager Adrian Hamilton-Manns unaware on Monday.
He said no servicing of the airline's aircraft were due. But he said the carrier's seventh aircraft, due for delivery to New Zealand in August, would be serviced in-house in Australia before coming to New Zealand for certification.
Virgin Blue spokeswoman Amanda Bolger said the airline has not had to exercise the escape clause in its contract because it was by mutual agreement. Virgin Blue has made alternative arrangements with John Holland Aviation Services to service two aircraft scheduled for heavy maintenance at the Christchurch facility.
Little said yesterday staff intended turning up for work on the strike day but would work only on foreign contracts.
He expected Air NZ would lock out staff.
Though the restructuring of the division was still fresh in engineers' minds they could not manage recent increases in the cost of living on a 3.75% pay increase.
Air NZ declined to comment on the memorandum.
www.stuff.co.nz/4555679a13.htmlThree airlines pull maintenance contracts with Air NZ
New 12:45PM Wednesday May 21, 2008
Three international airlines have cancelled heavy maintenance checks by Air New Zealand because of industrial action by its engineers.
But Engineering, Printing and Manufacturing Union (EPMU) national secretary Andrew Little said the action was restricted only to Air New Zealand planes.
In an internal memorandum issued to staff on Friday Air NZ's general manager technical operations Chris Nassenstein said Hawaiian Airlines cancelled airplane checks with Air NZ, and moved them to the United States.
Mr Nassenstein said the decision had "serious implications" for the five-year contract, which was still in its first year.
Virgin Blue and Pacific Blue also cancelled heavy maintenance checks at Air NZ's Christchurch base, preferring to have the checks done in Australia in light of the industrial action.
The airlines were able to cancel their contracts because of the industrial action, Mr Nassenstein said.
Last Friday, engineers refused to tow aircraft in or out of hangars, and from this Friday they will refuse to do engine testing, but only on Air NZ planes.
EPMU and Marine Engineers Association members, who make up the vast majority of Air NZ's engineering workforce, are seeking a 5.8 per cent pay rise.
They have voted not to accept an offer from the company that amounted to 3.92 per cent over a year.
They have already imposed a ban on overtime.
The unions and Air NZ have been in informal talks and hope to restart formal negotiations on Friday, Mr Little said.
He said the engineers concerns arose from "residual issues" from the 2006 restructure.
"There's no question that, from our point of view, the deal last time didn't have enough value in and they're after more."
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