Air Austral (UU, St. Denis de la Réunion) and trade unions representing its employees have until May 3 to agree on a proposed collective performance agreement (CPA) that would reduce the struggling airline's payroll by 10% over ten years.

Discussions between airline management and union representatives have been ongoing under the supervision of Réunion's prefect, Jerome Filippini, since April. An initial April 30 deadline was extended to allow for more time to reach an agreement, local media reported including the island's Radio Freedom, Le Quotidien de la Réunion, and Antenne Réunion.

Pressure is mounting to reach a solution as the CPA must form part of the airline's turnaround plan to be presented to an inter-ministerial government meeting by the second week of May. The proposed plan requires Air Austral to demonstrate efforts to reduce operational costs and cut payroll, with employees getting fewer days off and working fewer overtime hours. The expected savings from the payroll reduction are estimated at EUR10 million to EUR12 million euros (USD10.6-12.8 million) over two years. With 845 employees, the carrier faces annual payroll expenses totalling EUR78 million (USD83.4 million).

The company aims to demonstrate to the government its commitment to shared sacrifice, with both management and employees contributing financially. The restructuring plan aims to achieve a positive financial outcome for the airline by March 2025.

However, the unions argue they have already made significant sacrifices post-Covid, citing a 2020 agreement where they forfeited vacation days and bonuses. They insist on productivity-focused solutions and demand shared sacrifices across all company levels.

"We all agree on additional efforts, but which? We propose productivity efforts, but on the financial aspect this agreement must be a win-win," commented Marie-Noëlle Wolff, representative of the employee union UNSA Air Austral.

As foreseen in the airline's restructuring plan approved by its supervisory board on March 7, EUR10 million (USD10.6 million) has been committed to Air Austral, consisting of EUR4.5 million (USD4.8 million) from the regional government via minority shareholder (44.82%) Sematra and EUR5.5 million (USD5.8 million) from Run Aviation, a consortium of 27 local private investors who own 55.18% of the carrier.

In the aftermath of Covid-19, Air Austral had accumulated debts of EUR250 million (USD267 million), exceeding half of its 2019 turnover. In January 2023, the European Commission authorised France's plan to pay EUR119.3 million (USD127 million) in restructuring aid and EUR17.5 million (USD18.7 million) in compensation for pandemic-linked losses between March 17 and June 30, 2020. This followed a loan of EUR20 million (USD21.4 million) from the French state on January 18, 2022.