Danish pension fund sells Wizz Air shares over labor rights
Danish investor AkademikerPension has decided to sell its stake in Wizz Air after “losing patience” with the low-cost carrier’s labor practices.
The pension fund had raised concerns over Wizz Air in December 2021 and together with other investors had called for immediate changes to how the airline treats employees. It has criticized Wizz for not recognizing the rights of employees to join trade unions and to enter collective bargaining in Romania, Ukraine, Norway and Italy, among others.
In a statement on February 7, 2022, AkademikerPension said that Wizz Air only agreed to a meeting after press coverage of their criticism. According to the pension fund, Wizz Air management stated at the subsequent meeting that they did not want to change their behavior.
“After dialogue with the company's management, we have in no way been reassured that it will initiate the changes we have requested. On the contrary,” director of AkademikerPension, Jens Munch Holst, said in the statement. “Therefore, we see no other way than to exclude the company."
Human and labor rights
The European Cockpit Association (ECA), a representative body of over 40,000 pilots across Europe, conducted a survey of its members in 2021 in order to identify the best and worst airlines to work for.
According to the results, published on December 6, 2021, Wizz Air was ranked as “social misfit”, the second to last ranking category, joining other airlines such as Ryanair Group carriers. Wizz received low scores for its union engagement and collective labor practices but did receive high scores for training and gender balance.
AkademikerPension, a member-owned pension fund for 150,000 academics, has a responsible investment policy and says it has excluded a total of 575 companies and 47 countries.
On Wizz, Holst explained as follows: "Management's behavior is in conflict with human and labor rights in accordance with, among other things, the UN Guiding Principles on Human Rights and Business. And the risk of being linked to a clear and persistent breach of our responsible investment policy is simply too high if we remain invested.”
AkademikerPension is therefore selling its stake in Wizz for a total of DKK 22 million ($3.4 million). The company is worth around $6 billion on the stock exchange.
“Exclusion is the last tool in our toolbox. And if we are not ready to use it, we have nothing to threaten when we as an investor try to influence companies to change course in this kind of case. So now Wizz Air is out of our investment universe,” Holst said.
Wizz Air responds
In a statement given in response, Wizz Air said it takes engagement with its employees very seriously and highlighted initiatives to support dialogue with staff as well as improve its sustainability efforts.
“Wizz Air takes the engagement with its employees very seriously and we are confident that our structures and processes that have been in place to support open and transparent engagement are working extremely well, including our People Council, which provides a forum for employees to discuss important issues, frequent employee engagement surveys and a regular “Floor Talks” program which allows for a regular two-way dialogue with our CEO.”
The spokesperson said Wizz was “fully committed” to supporting its employees and wanted to create new jobs, even as the wider airline industry struggles with the effects of the COVID-19 pandemic.
“We consider our employees to be our biggest asset, which is why we have worked tirelessly over the last 18 months to preserve the jobs of over 5,000 colleagues, and to provide them with countless opportunities within our network to develop their careers.” Wizz Air noted it had to let go around 1,000 colleagues during the pandemic but had re-hired many and had plans to hire a further 1,000 staff over the coming months.
It also said it had restored pilot and cabin crew salaries to pre-pandemic levels.
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