NetJets Europe avoids layoffs while reducing pilot duty days

 - August 25, 2009, 7:03 AM

Shortly before the departure of NetJets chairman and founder Richard Santulli, NetJets Europe achieved its goal of reducing flight crew capacity by 60,000 pilot duty days per year in response to declining demand for its fractional ownership and block charter services. The reductions have been made after a three-month consultation process that has persuaded significant numbers of flight crew to take one of the following five options: either a long- or short-term leave of absence, job sharing, part-time work or voluntary layoff/retirement. In the process, the company has avoided the need for any compulsory layoffs.

The most popular option, taken up by 381 of the 1,046 pilots employed by NetJets Europe, was job sharing. This involves two pilots’ teaming up so that each works one-year-on and one-year-off over a four-year period. Another 87 pilots agreed to take voluntary layoff/retirement.

Thirty-one pilots chose to take a leave of absence ranging in duration from three to 24 months. Five pilots opted for part-time terms that cut annual duty days to between 120 and 150. Apart from those who have taken voluntary redundancy, all the pilots now covered by one of the revised working arrangements have remained under NetJets Europe employment contracts and are not permitted to work for direct competitors while not working directly for NetJets.

Robert Dranitzke, COO of NetJets Europe, acknowledged that the company could have achieved the necessary payroll savings more quickly and easily by simply laying off pilots. A company spokesman told AIN that it had opted to engage with the pilots to draw up an alternative means of making the cuts to preserve “company culture” and to pave the way for smooth transition in the anticipated upturn in demand for fractional ownership when the flight crew count will need to be increased again.

In a consultation process that began in April, a working group of NetJets Europe pilots and management evaluated 20 possible downsizing solutions and settled on five options. The pilots’ responses to these options actually resulted in a prospective cut of 6,000 more annual pilot duty days than needed to be achieved and so the company turned down some offers to reduce working time. The overall goal had been to reduce its €100 million ($140 million) annual pilot wage bill by a “significant” but undisclosed amount.

It is an indicator of how quickly the fortunes of business aviation have shifted that barely two years ago NetJets Europe faced exactly the reverse challenge: it couldn’t recruit enough suitably qualified pilots quickly enough. This prompted the company to launch an innovative ab initio training program to prepare hand-picked candidates to join its ranks after earning pilot certificates at the UK’s Oxford Aviation Academy.

The first nine graduates from this program joined the company as recently as February, and 16 are now on the payroll as first officers progressing with their line training. These pilots have been included in the same consultation process over future work options as their established flight crew colleagues.

NetJets Europe has accepted a total of 68 trainees for the ab initio program. Of these, 52 are still at various stages of training. They have been offered a paid long-term leave of absence under which they will complete the ab initio training but will then defer the start of line training with the company until market conditions have improved and the other line pilots have been recalled. The alternative offer was voluntary termination of their contracts, with compensation; only four students took this option. By March next year, all of the remaining trainees are set to graduate from Oxford and no more ab initio trainees will be taken on until market conditions improve.

“NetJets sees these measures as a long-term commitment to our pilots,” said the company in a statement. “They will continue with completion of all parts of the course, including the NetJets specifics as planned, which will ensure we maintain the very high standards already set for all pilots joining NetJets.”