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Colombia Reaches Labor Deal With Air Traffic Controllers

02/20/2012 | 08:23am US/Eastern

Colombia's government has reached a labor deal with air traffic controllers to end a standoff that forced the country's dominant airline, Avianca, to cancel nearly 150 flights over the past five days, stranding thousands of passengers.

Santiago Castro, head of civil aviation authority Aerocivil, told local television on Monday the deal to end the dispute, which began several weeks ago over air traffic controllers' salaries, was agreed to around midnight on Sunday. It should allow flight schedules throughout the country to immediately return to normal, he said.

Air traffic controllers, who are government employees, enacted a "turtle plan" in recent weeks in which they purposely worked slowly or called in sick en masse to pressure the government to increase their salaries and hire more employees. Controllers say they've been overworked and underpaid in recent years as Colombia's gaining economy led to a sharp rise in air traffic.

Avianca, Colombia's flagship airline which is responsible for more than half of all passenger air traffic, bore the brunt of the strike by controllers. It canceled an average of nearly 30 domestic flights a day starting Wednesday, and in a statement that day it urged the government to resolve the dispute with controllers.

No international flights were affected by the strike.

Other top carriers such as Lan Colombia, which is part of the Chilean flagship carrier LAN Airlines SA (LFL, LAN.SN) and Copa Colombia, which is part of the Panamanian airline group Copa Holdings (>> Copa Holdings, S.A.), were hardly affected by the strike.

Avianca is the main carrier of the airline group AviancaTaca Holding SA (PFAVTA.BO). Its shares on the Colombian Stock Exchange closed down 0.2% Friday compared with a 0.3% rise in the bourse's main Colcap index.

Much of the increase in air traffic has been in international flights. Colombia is seeing more than double the amount of international flyers it saw a decade ago when a drug trafficking-fueled guerrilla conflict kept away most foreigners. But a military offensive against the rebels has helped reduce the level of guerrilla-linked violence considerably in recent years, encouraging more foreign travelers to visit.

-By Dan Molinski, Dow Jones Newswires; 57-310-867-6542; dan.molinski@dowjones.com

Stocks mentioned in the article : Copa Holdings, S.A., Lan Airlines S.A.
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