Lufthansa Pilots to Get Offer as Strike Cripples Munich

Deutsche Lufthansa AG Chief Executive Carsten Spohr signaled he is not willing to give in to his pilots’ demands even as the most recent walkouts lead to spiraling costs and disruptions at Germany’s largest airports.

“I have to make a trade-off between our long-term perspectives and short-term burdens,” Spohr said late yesterday in an interview with Germany’s HR Info radio. “If conflict is needed for change, I regret that, but the reasons that force us to change won’t go away.”

Spohr’s comments come after pilots staged a third strike in two weeks yesterday, forcing the carrier to cancel about 140 flights to and from Munich. The series has hit Lufthansa as it wrestles with increasing competition and falling prices and tries to push through its most ambitious efficiency program yet.

Spohr earlier said he will make more concrete Lufthansa’s current offer to solve the conflict about early retirement benefits for pilots next week, seeking to end a dispute that had caused six days of strikes this year.

The pilots staged a three-day walkout in April, their first since 2010, forcing the airline to cancel 3,900 flights and trimming profit by 60 million euros ($77 million), with bookings taking about six weeks to recover. The three recent walkouts at the Germanwings low-cost unit, at Lufthansa’s main Frankfurt hub and in Munich caused a total of about 500 suspended flights, and will trim profit by about the same amount as the April action, Thomas Kluehr, head of passenger services outside the main Frankfurt hub, said in Munich.

Lucky Employees

“When I look at our most important stakeholders -- customers, employees and shareholders -- I think in the past years our employees have been the best off,” Spohr said in the radio interview.

In June, Spohr abandoned a target set by his predecessor to lift operating profit to 2.65 billion euros by next year, as increasing competition from low-cost and Gulf carriers depressed fares, sending the shares to their biggest daily drop since Sept. 11, 2001.

While the pilots’ union said the strike is aimed at pressing the company for a new agreement over early retirement benefits after Lufthansa canceled contracts at the end of last year, a list of 15 topics is circulating, including wage negotiations, which have continued for more than two years.

Pilots until now could retire as early as age 55, with Lufthansa paying benefits of as much as 60 percent of the last salary to bridge the gap until the government pension plan kicked in. Lufthansa aims to lift the age threshold to 60.

The carrier deployed a Boeing Co. 747 on an extra service from Munich to Frankfurt to shuttle stranded passengers, and managed to operate about half of all scheduled continental services as it had enough pilots volunteering so it did not have to fall back on management pilots, it said. About 15,300 passengers were affected, and some flights will also be canceled later this week.

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