VIENNA A top legal official at the European Court of Justice (ECJ)advised judges on Tuesday to rule that old Austrian Airlines collective wage agreements are valid until a new one is agreed.
The ECJ has been asked to rule whether Austrian Airlines, owned by Lufthansa, could unilaterally cancel a previous agreement when it transferred its flight operations to its lower-cost Tyrolean Airways subsidiary in 2012.
Lufthansa said in its 2013 annual report that the outcome of various court cases challenging the transfer could threaten Austrian Airlines' future.
The transfer of about 2,000 pilots and flight attendants to Tyrolean was a key element of a restructuring programme the loss-making Austrian Airlines embarked on after its 2009 takeover by Lufthansa from the Austrian government.
Tyrolean staff now work according to their previous pay deals, while Austrian Airlines pay has been frozen.
Austrian Airlines called off long-running talks last week with its works council on a new collective wage agreement, after the works council rejected an offer from the company that it said could lead to wage cuts in real terms.
The works council wants the basis for the talks to be the old Austrian Airlines collective wage agreement, while the company wants to negotiate on the basis of the less-generous Tyrolean contracts.
The ECJ's advocate-general, whose opinion is followed by the court in most cases, said on Tuesday collective wage agreements remain in force when operations are transferred to a new company until they expire or are replaced by a new agreement, even if cancelled by one side.
In general, ECJ judgements follow three to six months after the opinion. No date has yet been set for a ruling in this case, which was referred by the Austrian Supreme Court.
The Vida trade union and the Austrian Airlines works council welcomed the advocate-general's opinion in a joint statement.
"It is, however, neither a time for jubilation nor for putting one's head in the sand. What counts is not to waste the time until the potential ruling of the ECJ or the Supreme Court but to return to the negotiating table immediately," they said.
An Austrian Airlines spokesman said the opinion did not necessarily go against the company since it implied that both the previous Austrian and Tyrolean collective wage agreements were still valid.
"There is still room for interpretation and we have enough time to look into the issue in more detail and to determine what room we have for negotiation," he said.
As a result of the 2012 transfer to Tyrolean, Austrian reduced its pension obligations, helping the carrier to return to an operating profit last year after five years of losses.
Lufthansa said in its 2013 report: "If it should come to a definitive judgment against the company, the one-off effects alone, such as the additional provisions for pensions and severance payments as well as the necessary back payments to employees, would jeopardise the unqualified classification of Austrian Airlines AG as a going concern."
"A further external opinion would then be needed to determine the chances of the company's continued existence."
Lufthansa shares were down 0.7 percent at 19.44 euros by 1415 GMT, broadly in line with the European transport and leisure index.
(Reporting by Georgina Prodhan and Alexandra Schwarz-Goerlich; Editing by Erica Billingham and Pravin Char)