Lufthansa Truce Ends as Pilot Strike to Hit Long-Haul Routes

Updated on

Deutsche Lufthansa AG pilots will resume striking Tuesday, almost six months after walkouts over cost cuts were halted as management and unions came together in the wake of a deadly crash at the company’s Germanwings arm.

Lufthansa scrapped 84 long-haul flights scheduled for Tuesday, or almost half of its intercontinental program, after the Vereinigung Cockpit union said pilots would strike from 8 a.m. through midnight. The action extends a series of 12 walkouts since April 2014, the last of which came three days before the March 24 crash in the French Alps.

Chief Executive Officer Carsten Spohr said last week he’s ready to endure more strikes to force through changes aimed at helping Lufthansa compete with low-cost carriers in Europe and Persian Gulf rivals on long-haul routes. The walkouts have wiped about 300 million euros ($334 million) from operating profit, causing him to cut the Cologne, Germany-based company’s financial targets twice during his first year on the job.

Lufthansa has struggled to maintain operations even beyond periods of industrial action following a jump in the number of staff on sick leave, with Spohr last month boosting payments for cabin crew to forgo days off by 70 percent to 110 euros a flight. The crisis extends to ground workers, with 20 percent missing in Frankfurt during some weeks this summer, according to internal Lufthansa figures obtained by Bloomberg.

Scrapped Flights

Nicoley Baublies of cabin-crew union Ufo has said the patterns reflect strains on staff as they’re asked to work to tighter schedules, and as Lufthansa extends its campaign to pare staff benefits and boost productivity.

Tomorrow’s strike will target intercontinental services that rank as the most lucrative for network airlines, with flights to or from New York, San Francisco, Los Angeles, Delhi, Toronto, Beijing, Seoul and Shanghai among those scrapped through Thursday. Pilots flying Airbus Group SE A330s, A340s and A380s and Boeing Co. 747s, as well as cargo models, are participating in the walkout.

Strikes involving such routes can be harder to recover from, with aircraft left thousands of miles out of position once flying does resume. September is also generally an important month for carriers, with the end of the summer vacation season coinciding with a surge in business travel.

The action is a repeat of the last strike on March 21, which caused about 74 flights to be canceled. Including disruptions to crew and aircraft rotations, Lufthansa lists 104 canceled flights on its website.

Retirement Age

Vereinigung Cockpit in July offered to extend the retirement age for flight crew to help cut costs, so long as Lufthansa agreed not to move more pilots outside of its main collective bargaining agreement.

That’s not something Spohr wants to accept as he seeks to transfer a chunk of short-haul flights to Lufthansa’s former regional brand Eurowings, which will operate as a discount unit with lower average pay. He has also established a Eurowings arm in Austria -- beyond the reach of the German union.

Lufthansa today said it had made the union a new offer for transitional benefits, would hire young pilots who recently completed training and would for the time being not station any aircraft from its Austrian Eurowings arm in Germany. The union turned down offers for talks on the weekend, the carrier said.

Lufthansa pays new hires 44,000 euros per year base salary for positions as first officers at the Austrian Eurowings arm, and 102,000 euros for captains with 10 years of service. At Lufthansa’s main carrier, captains’ pay can reach twice that, the carrier said.

Some 150 people were killed in the Germanwings crash, with investigators blaming the incident on a pilot with mental health issues who deliberately flew the jet into a mountain.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE