"A little off-topic", but thats what you find on their homepage about this
Essential repositioning of the Airline
The project "Building a new Airline"
The project "Building a new Airline", which should allow Luxair Airline to reach a financial break-even by the end of 2008, has now entered its decisive phase. Luxair Airline registered a loss of 12 million euros in 2005. If no concrete measures are taken, projected results by the financial year 2008 would amount to a loss of over 21 millions euros. These losses might become even more significant if, for example, additional competing airlines take up business at Findel airport or if oil prices continue to rise. Such an accumulation and increase of losses not only jeopardize the Airline activity but Luxair S.A. as an entire company.
The project “Building a new Airline” aims at taking the necessary actions which will enable the Airline activity to reach a financial break-even and become profitable again by the year 2008, and which simultaneously guarantee the viability of Luxair as a major market player in Luxembourg and the Greater Region.
Improve commercial effectiveness
A series of measures aimed at cutting costs and increasing revenue is currently being implemented. Their objective is to improve commercial effectiveness by redefining the fare structures, by boosting the development of e-commerce and related products such as e-ticketing, by elaborating a commercial policy with enhanced focusing on customer needs, and more.
Simultaneously, a large cost cutting programme not linked to payroll is in the course of being implemented, including the renegotiation of contracts with service suppliers or the optimisation of production and strict cost monitoring.
In order to consolidate the existing markets and to capture new market segments, Luxair is also negotiating commercial agreements with other operators with a view to concluding code share agreements, following the example of the cooperation with Alitalia started recently for flights to and from Italy.
Additional measures to ensure the viability of the Airline
However, these sole measures will not suffice to make the Airline activity a viable business.
In order to improve the financial situation of Luxair Airline, a consistent increase in productivity and a reduction of the number of destinations served, as well as the restructuring of the fleet are deemed essential.
As these measures are bound to have an impact on payroll, Luxair will have to operate a progressive reduction of staff numbers, cutting about 200 jobs by the end of 2008.
Simultaneously, a freeze of salaries, applied to the entire company for the period 2007-2009, will allow Luxair to make the necessary extra savings.
With a view to implementing these extra measures, the Board of Directors, in its meeting of March 31st, 2006, gave a mandate to Luxair Management to inform and consult the Luxair Joint Committee and the social partners on these measures.
Reduced number of Luxair destinations
Luxair intends to adapt its route network to the economic realities and to the competitive environment as of the winter 2006 schedule. This entails giving priority to those destinations which have real potential and to those which are strategically essential such as London, Paris or Frankfurt. Several destinations which are currently generating heavy losses will be abandoned and there will be fewer flights to other destinations.
Restructuring of the fleet
Efficiently operating the new network of Luxair destinations will also have repercussions on the structure and size of Luxair’s future fleet. Luxair is considering e.a. the introduction of an aircraft type with 70 to 90 seats and has therefore asked for price offers with constructors such as ATR, Bombardier and Embraer.
At the moment, an option considering a fleet composed of 12 aircraft is being finalised and the final decision as to the new fleet will be taken at the beginning of May 2006.
Improvement of productivity in general
A consistent increase in productivity should enable the Airline - and Luxair in general – to optimise its production processes. Productivity gains will be negotiated as part of a discussion to renew Part 2 of the Collective Work Agreement for Employees applicable to crews, and will also be obtained as a result of specific measures within the different departments of Luxair S.A.
Reduction of staff numbers
These measures, designed to safeguard the future of the Airline and thus of Luxair, will have a knock-on effect on staff numbers. Luxair Management estimates that about 200 jobs will have to be cut by 2008. Job cuts are not an end in themselves but an unavoidable result of the steps to be taken in order to guarantee the survival of the Airline and of Luxair.
The job cutting programme will be applied progressively by the end of 2008 and comprises specific measures to operate this transition in a socially acceptable manner: freeze on recruitment, early retirement programme, staff encouraged to take early retirement, financial incentives for voluntary redundancies, part-time work or job transfers. All these measures are currently the subject of talks with the social partners.
Freezing of salaries
Luxair intends to freeze the salaries of its entire staff from 2007 to 2009 in order to enable the savings that are essential to the company’s future viability. Salaries will of course continue to rise in line with the index.
Social dialogue and information of staff
Luxair will continue its policy of information and transparent communication on the project “Building a new Airline”. The dialogue with social partners and Luxair staff will remain Luxair’s priority.
A first discussion with the Joint Committee and the social partners took place this morning, Monday April 3rd, 2006. Two special staff briefings for Luxair personnel are scheduled for this week, resp. next week.
A new Luxair in 2008
Luxair trusts that by 2008, the project “Building a new Airline” will be implemented successfully. Luxair firmly intends to become a benchmark company at the service of the population in Luxembourg and the Greater Region and to stand out a socially responsible employer.
Press contact: Marc Gerges, phone (+352) 2456-4026