A collective agreement signed just over year ago between Estonian Air and its pilots has run out, and pilots are asking for a 40 percent pay increase over the next three years.
CEO Jan Palmer told uudised.err.ee today that the airline is in no position to sign an agreement that would decrease financial efficiency that significantly.
He said that they submitted a restructuring plan to the European Commission with certain figures, and that plan has so far gone according to plan.
The previous collective agreement ended on February 1, but will be in effect until a new contract is signed.
Negotiations on that contract 13 months ago caused a major headache for the company, as the company was in deep financial troubles already and ticket sales plummeted further after the possibility of a pilots' strike emerged.
Juhan Parts, the economy minister, said that the 2012 negotiations caused the company four million euros in damages from a drop in ticket sales.
European Commission begins investigation
A large state loan saved the airline at the beginning of last year, but the European Commission announced on Tuesday that they will begin an investigation.
The loan was submitted to the Commission last July for approval, although the company had already received part of the financial injection.
The Commission will assess whether the airline's restructuring plan is in line with EU state aid rules, and whetherthe plan will restore the company's long-term viability.