Divide and Conquer at Cargolux

My Orchids. Oncidium Bifolium. Photo ET

Divide and Conquer at Cargolux

Last year was the year when Cargolux as a company was still in visual flight mode through bad weather. The CWA negotiations provided for some interesting if not entertaining maneuvering. Though earnings might be OK. Also, some of the past strategic issues, such as a new Chinese shareholder or the future of Cargolux Italia were addressed in a more or less satisfactory way and are facts now that one has to live with. So it was the CWA negotiation that was top on the agenda, and provided for some drama. It was a classic Battle of Interior Lines between management and the unions, though participants might not have been aware that they engaged in  classical military tactics.

In a Battle of Interior Lines, one side, usually the one on the defensive, tries to isolate components of the opposite side into separate smaller parts, and beats them one after the other. It goes back to the Punic Wars, and was used for the last time by Moshe Dayan of Israel in the Six-Day War, beating Arab adversaries one by one at a time. The manoeuver in the Cargolux case was successful because the opponents to Management, OGBL and LCGB were not coordinated, which split them into those two smaller opponents that could be dealt with one at a time. It happened because both had different agendas, were unable to bid a united front, and so they were divided and conquered, or sort of. The situation however was a bit more complex, because there are three winners: Management of course, but mostly OGBL and unexpectedly all employees through the new leverage that the OGBL deal provided.

Management of course took advantage of the divisions to settle with OGBL first. However that settlement was very costly, and that’s why all employees are most likely the winners. The future will show that the negotiated clause about profit sharing is loaded with power for the employees. Indeed there cannot be a profit sharing agreement for employees without granting extensive rights to their representatives to look into who is cooking the books, and whether the corporate and employees’ interests are aligned and safeguarded in corporate decisions. Congratulations to the new partners at the decision table.

LCGB took a hard line, and had initiated a strike of sorts, that left aircraft grounded, about the “call-in sick” issue. But could LCGB even afford a strike? Whereas the union representing mostly pilots became engaged in a rhetoric spinning the willingness to strike, the company threatened with claiming damages of Euros 3 million for the harm made to the company by the earlier strike. And the union was happy to catch a way out of the cul de sac.

LCGB’s action was less about CWA than about the security issues they claim management ignored. Indeed many pilots have that concern, and it is amazing why management would take the risk to treat the security questions with benign neglect. That safety argument would have had a lot of leverage, unless you bring it up with no deep conviction. On the CWA side, insiders know that management treated itself well, as it appears that over the last two years their compensation went up by about 30% each year, with top compensations close or beyond Euros 1 million a year. That argument would have had some leverage too in the CWA domain. Yet LCGB blinked, leaving the battleground with nothing else than a vague settlement a promise by Management to drop claims for damages in a lawsuit that wasn’t even yet brought. And yes, there will be a Commission to deal with the unresolved questions. You cannot talk this into a success. CV Management clearly won this one. The underlying lack of unity among unions is of course the competition for dominance. It will really be played out at the next elections when employees choose their new union leaders.

In the meantime the employees are winners with the OGBL agreement: the profit sharing and the right to be informed that comes with it goes beyond what people expect it to be today. It is a milestone. The ones hurt however are those pilots who now are on the black list of what the company may call illegal strikers. Are they left out there in the rain? Unless LCGB had the wisdom to demand that any mention of their participation in the “strike” be expunged from their personal files.

Now we have Cargolux flying under smooth skies for a while. Unless Minister Bausch, who is in China talking about Cargolux and Cargolux China messes something up. Though he cannot really talk in the name of Cargolux, because as you know, he couldn’t do so before either, Cargolux is a “private company”.