Lufthansa Fails to Block Pilot Strike as 1,000 Flights Cut

Updated on

Deutsche Lufthansa AG’s attempt to block an escalation of this week’s pilot strike that pushed it to cancel more than 1,000 flights was dismissed by a Frankfurt court.

The strike can proceed and is not disproportionate, Gesine Brackert, a judge at the Frankfurt labor court, said Tuesday. The airline has appealed the decision and the Hessian state labor court scheduled a hearing on it for 10:30 a.m. Frankfurt time on Wednesday.

Lufthansa sought an injunction against the action and said it will impose a hiring freeze and limit the scope of labor talks, adopting a tougher stance after the Vereinigung Cockpit union told members to include European flights Wednesday in a strike that crippled long-haul operations Tuesday.

At the heart of the conflict is Lufthansa’s decision to create a European low-cost carrier that it plans to expand to become the region’s third-largest. Lufthansa claims that’s an entrepreneurial decision over which the union, which argues the vehicle affects its collective bargaining accords, has no say.

Europe’s second-biggest airline slashed timetables to prepare for the walkout by pilots of Airbus Group SE A320, Boeing Co. 737 and Embraer SA narrow-body planes Wednesday, taking cancellations for the week to four figures. A strike by wide-body crews grounded half its long-haul flights Tuesday.

Industrial Action

Pilots resumed industrial action six months after 12 rounds of strikes ended as management and unions came together in the wake of a crash at Lufthansa’s Germanwings arm. Chief Executive Officer Carsten Spohr, who said last week he’s ready to endure more strikes to compete with low-cost carriers and Persian Gulf rivals, has already twice cut earnings guidance.

“The financial damage is increasing,” Dirk Schlamp, an analyst at DZ Bank in Frankfurt, said in a note, adding that there is a “relative high likelihood” of further action that will also take a reputational toll on Lufthansa.

The carrier had filed injunctions with courts in Cologne, where it is based, and Frankfurt, home to its main hub, to stop the latest strike. The Cologne hearing had not yet started when the Frankfurt decision came. An emergency suit lodged by the airline in October was also rejected by courts in Frankfurt. A separate lawsuit has also been filed seeking compensation from Vereinigung Cockpit related to a strike in April last year.

Limited Talks

Talks with the pilot union will now be strictly limited to collective bargaining issues, the carrier said, adding that the hiring freeze at Lufthansa, Germanwings and cargo operations will result in shrinking aircraft fleets there.

Bettina Volkens, the Lufthansa board member for human resources, said in a statement that each strike diminishes the scope for finding a solution to the conflict. The first walkout was in April 2014, with the most-recent before this week coming three days before the March 24 Germanwings crash.

Lufthansa was forced to begin scrapping flights Monday just to cope with today’s action and the Wednesday walkout is likely to extend disruptions into Thursday at least. The strike will include flights at Germanwings that are due to replace ones currently operated by the main airline -- a switch that’s at the heart of Spohr’s plans to pare expenses.

September is generally an important month for carriers, with the end of the vacation season coinciding with a surge in business travel. Lufthansa said the walkout will hit families returning from vacation, with the summer break ending in two of Germany’s largest states this weekend.

Pilots must pitch in like other groups to help Lufthansa become more competitive, the company has said, while the union aims to prevent aircraft and flight deck jobs being moved beyond the mainline brand and even to Austria, where the group has created a low-cost subsidiary to fly for its Eurowings brand.

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