Final Word from Tuesday, June 17, 2003

ČSA reached a deal with pilots early this morning for avoiding a strike. Details weren't available yet, but the pilots were seeking a 113% average salary increase over two years. ČSA is one of the best examples of a Czech company in a wage trap. It's able to offer a world-class service, partly because relatively low wages give it a cushion against other costs. As its pilots compare notes with their foreign colleagues in hotel bars around the world, their appetite for more money understandably grows. But if their demands become excessive, they'll push ČSA into the same mess faced by some of the world's other airlines. In the U.S., according to Delta's president, airline pay and benefits are in the top 5% of corporate America, yet the results are in the bottom 1%. ČSA's future success depends on convincing employees that the foreign model isn't always the best one.


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