Dear Colleagues,
As you are all aware, NetJets Europe has over the last few years faced unprecedented market conditions.
The prolonged downturn in the economy has led to a fall in demand generally for business aviation. In the circumstances, we have had to look at whatever steps we can take to control and reduce our own costs to safeguard the competitiveness of our business.
We have already implemented a comprehensive set of measures to reduce and control costs. Both the Voluntary Options and the more recent Voluntary Separation programme sought to minimise impact on pilots as far as possible and were initiated in good faith to avoid having to terminate employment on the grounds of redundancy, in the hope that in due course the economy would pick up.
As the Voluntary Options programme comes to an end within the next 15 months and following the final swap of most crew members to their job share year on, we have had to look again at the number of pilots we employ and compare this with anticipated demand.
Last year, when we launched the Voluntary Separation programme, we informed you that our forecasts indicated that at the end of the Voluntary Options programme, the probability was that we would still have too many pilots when compared with likely flight demand. The Voluntary Separation programme was therefore intended to help address this. Although the offer of voluntary separation was taken up by 152 employees, unfortunately, in the light of continued lower flight demand, this was not sufficient to address the issue of over-capacity of pilots. We expect that trading conditions across Europe will remain fragile and, based on our current forecasts, we do not expect to see a return to the levels of demand that would require our present crewing levels for several years. In the circumstances, it is critical for the future of the business that we take steps now to address this issue.
Currently, we employ 780 pilots of whom 529 are pilots-in-command (PICs) and 251 are seconds-in-command (SICs). Our assessment is that, whilst we do not have any excess of SICs (and they are not therefore affected by this proposal), we need to reduce the total number of PICs by 128.
In addressing this matter, we have to take account of another issue facing the business which is a significant change in European social security regulations. As you are aware from previous communications, the current position is that under EU law the UK system of social security contributions applies to crew employed by NetJets Management Limited (NJML). However, a new European regulation that has come into force now affects the social security regime applicable to crew based upon the country in which their gateway is located. We estimate that based on current crew levels and social security rates, these changes will cost the business an additional €6.3m per year in employer contributions.
Proposals
In light of the position outlined above, we have formulated proposals to address the issues we face as a business. Unfortunately these proposals would involve job losses. These proposals are subject to consultation with employee representatives to be elected by the affected employees.
Our proposal is to reduce the number of PICs employed by NJML from 529 to 401, i.e. a reduction of 128.
If possible, we would like to avoid the need to make any compulsory redundancies. We therefore propose to offer voluntary redundancy to PICs with gateways in the six countries with the highest employer social security rates. These are listed below in descending order (i.e. of the six countries France has the highest rate and Hungary the lowest):
Country
Number of PICs with gateways in that country as at 5 October 2012
France
105*
Belgium
61
Czech Republic
2
Sweden
9
Italy
10
Hungary
1
* PICs with Basel and Geneva gateways have been included in the total number of PICs with gateways in France and will be given the opportunity to opt for voluntary redundancy. Further clarification is required from the authorities regarding the treatment for social security purposes of PICs with these gateways before we can confirm whether or not such PICs would be included in any compulsory redundancy exercise.
PICs with gateways in these countries will under the proposal have the option to leave with a one-off compensation payment equivalent to 15 months’ base salary (less applicable tax and social security payments) regardless of seniority. This sum will include any individual notice pay and redundancy payment entitlements but, clearly, will be well in excess of the value of those entitlements.
If the necessary reduction in the number of PICs cannot be achieved through voluntary redundancy, then the proposal is to select PICs for compulsory redundancy based first on the employer social security rates of their gateway country and secondly, where employees have gateways in the same country, by reference to their salary costs. It is proposed that PICs who are made compulsorily redundant would receive their contractual notice and a redundancy payment calculated in accordance with UK law but not any enhanced severance package.
In addition to the proposals outlined above, we have decided that, while gateways in the following countries will remain open for PICs and SICs already operating from those gateways, they will be closed to new moves:
France
Belgium
Czech Republic
Sweden
Italy
Hungary
Finland
Norway
A revised gateway policy reflecting these changes will be circulated to all crew members today and comes into force with immediate effect.
From today all permanent gateway moves will be suspended for the duration of the consultation period.
Consultation and Election of Employee Representatives
As stated above, these proposals are subject to consultation with employee representatives to be elected by PICs with gateways in France, Belgium, Czech Republic, Sweden, Italy and Hungary.
Details of the main functions of these representatives can be found at:
The role of employee representatives | Business Link.
The company therefore invites PICs to elect:
• two representatives for PICs with gateways in France (the France Constituency);
• two representatives for PICs with gateways in Belgium (the Belgium Constituency); and
• two representatives for PICs with gateways in Czech Republic, Sweden, Italy and Hungary (the Third Constituency).
As a PIC with a gateway in one of the relevant countries, you are entitled to nominate an individual for election as an employee representative. You may nominate yourself or any other PIC with a gateway in the same constituency as yourself. For example, PICs with gateways in France can only nominate themselves or any other PIC with a gateway in France. PICs in the Czech Republic may nominate themselves or any other PIC with a gateway in the Czech Republic, Sweden, Italy or Hungary.
Your nominee must be an employee of NJML. Please also check that your nominee is willing to stand as a candidate for election.
Employee representatives will serve until the end of the consultation process which is anticipated to last until 31 January 2013. It is anticipated that the first meeting with employee representatives will take place on 31 October 2012 and that subsequent meetings may take place at regular intervals thereafter.
If you wish to nominate yourself or someone else for election, please complete the nomination form (at the end of this email and attached) and return it to Carla Pombeiro by e-mail at
[email protected] by 12pm Lisbon time on 12 October 2012. In the case of a nomination of a colleague, your form must be accompanied by an email from the nominee agreeing to stand for election. Nomination forms received after this date will not be considered.
If more nominations are received than the number of vacancies, then a secret ballot will be arranged to elect employee representatives. Each PIC in a constituency will be entitled to two votes. The ballot will be conducted by Electoral Reform Services (an independent body) in order to ensure fairness, accuracy and confidentiality.
Questions
If you have any questions in relation to the proposals set out above or the consultation process, please send them by email to
[email protected]. I have also attached answers to some FAQs for your information.
I appreciate that the announcement of these proposals is likely to cause significant concern and great uncertainty. As soon as the representatives have been elected we will commence detailed consultation with them and in addition we will keep you informed of developments throughout the consultation process. In the meantime, I would ask you to continue to focus on delivering to our customers the highest standards of safety and service.
Yours,
Mark
MARK WILSON
Chief Operating Officer
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