- Parties give no details about current status of contract talks
- Eurowings division’s role, pension costs are key issues
Deutsche Lufthansa AG extended a self-imposed deadline by a week to reach a deal with its pilots union to solve a long-running dispute over benefits and wages.
Talks between Lufthansa and the Vereinigung Cockpit union will continue until Aug. 5 as not all open issues have been sufficiently discussed, the union said in a statement. The parties won’t provide details about the status of the talks until then, it said.
The airline and the union said in May that they were seeking “decisive progress” on unresolved issues spanning pay to pensions by the end of July following concessions by both sides. Strikes by the union and flight attendants have reduced Lufthansa’s operating profit in the past two years by a combined 463 million euros ($517 million). The most recent walkout by pilots, in September, was only halted after a court ruled the action illegal. The company said later that it may seek damages from Vereinigung Cockpit for an apparently illegal strike earlier in 2015.
Chief Executive Officer Carsten Spohr has made progress in improving labor relations and reining in the company’s pension deficit, signing contracts with ground staff in November and flight attendants last month. Both those deals include a switch away from specifying the magnitude of pensions that retirees receive in favor of just defining the amount the company puts aside for them. Spohr is also trying to reduce spending by curbing benefits, and Lufthansa will cut jobs at its catering, maintenance and cargo units.
A deal with the pilots would end a long-running dispute with labor leaders over the Eurowings discount unit’s widening role at Lufthansa, which in addition to its namesake brand also owns mainline carriers Austrian Airlines and Swiss and a 45 percent stake in Brussels Airlines.
The company’s defined-benefits retirement system has pushed up pension obligations to 8.08 billion euros as of the end of March, the highest among airlines in Europe. Falling interest rates have inflated it further since, sending equity as a proportion to total debt down to 10.4 percent as of June 30. Lufthansa targets an equity ratio of 25 percent.