VIENNA (Reuters) - Lufthansa's (GER:LHA) 2012 transfer of thousands of staff from its Austrian Airlines unit to the cheaper Tyrolean Airways division was not legal, a Vienna court ruled on Monday.
Austrian Airlines said in a statement it would appeal against the verdict of the Vienna Labour and Social Affairs Court, which called into question the centrepiece of the loss-making airline's restructuring.
Lufthansa has said the partial transfer of Austrian Airlines' flight operations to Tyrolean, involving around 2,000 staff, boosted its 2012 operating profit by 115 million euros (97.8 million pounds), helping it return to profit.
A spokesman for the Vienna court said the court's ruling meant the staff were still employees of Austrian Airlines, with their more generous employment contracts, pending possible appeals to two higher courts.
Austrian Airlines Chief Executive Jaan Albrecht said in the statement: "We will pursue every legal avenue at its disposal in the appeals process in order to also legally safeguard our restructuring path."
"In the meantime, we hope that the talks initiated with the works council on the collective wage agreement will result in a viable solution independent of the decision handed down by the court," he added.
About 300 staff left Austrian Airlines over the bitterly fought transfer last year, many of them receiving large payouts.
Europe's flagship airlines are battling to cope with slow demand in a weak economic environment as well as competition from low-cost carriers and Middle Eastern rivals.
(Reporting by Georgina Prodhan; Editing by Anthony Barker)