Lufthansa Stands Firm on Costs as Union Threatens Joint Strike

  • Airline cancels more than 4,700 flights through Friday
  • Flight attendants union holds rally, may team up with pilots

Deutsche Lufthansa AG stood firm on plans to lower costs and overhaul the airline as flight attendants threatened to team up with pilots and ground workers next time around in a labor dispute that has already brought the airline’s longest ever strike.

Both sides are digging in their heels in a standoff that has already led in the last week to the cancellation of 4,700 flights, impacting travel plans for half a million customers.

UFO strike in front of the Lufthansa Aviation Center

Photographer: Martin Leissl/Bloomberg

Nicoley Baublies, head of the UFO cabin crew union, said Friday as the current round of walkouts come to an end that he may call additional strikes to press management to accept his demands and may team up with other labor groups currently negotiating separately with the airline. Baublies spoke to hundreds of protesters outside the offices of Lufthansa’s management board at the Frankfurt airport.

Flight attendants and pilots are fighting Chief Executive Officer Carsten Spohr’s efforts to overhaul Lufthansa and develop the Eurowings division into a low-cost arm to compete with rivals such as Ryanair Holdings Plc and EasyJet Plc. Spohr has stuck with that strategy even as mainline brand employees resisted, viewing the future gains as worth the immediate hit. Board members Bettina Volkens and Simone Menne on Friday faced the angry crowd and said the carrier can’t back down.

“What we offered in the current negotiations is what we can afford,” Menne, the airline’s chief financial officer, said at the rally. “We need structural changes to our cost base in order to compete successfully. We want to put the company on a healthy foundation. With the current costs there can be no growth.”

Lufthansa staff costs

Lufthansa’s latest offer to UFO included a one-time payment of 3,000 euros ($3,230) per employee and acceptance of the union’s demands on early retirements, but only for current workers. The carrier also said it will scale back flights. Baublies has called that a “provocation.”

Kepler Cheuvreux estimates the financial impact of the strike ending Friday at about 100 million euros. Menne declined to give an estimate. A parallel dispute with pilots that led to 12,800 cancellations over an 18-month period amounted to a financial hit of 352 million euros. Walkouts by pilots ended in September when a German court ruled that the moves marked an illegal effort by the Vereinigung Cockpit union to fight corporate strategy. Vereinigung Cockpit said on Tuesday that it had filed an appeal at the Constitutional Court, Germany’s highest court, against that ruling.

The strategy centered around Eurowings is not what the cabin crew union is fighting, Baublies said, adding he was willing to help the unit expand if management stopped “running the company by fear.” The conflict formally is about terms for early retirement and corporate pensions, but the talks span 23 subjects in total.

Volkens, Lufthansa’s personnel chief, said the common goal of management and staff must be to fight Ryanair and other rivals, not each other.

“We have enormous challenges to tackle, all of us, and it is hard,” she said. “Our enemy is outside, not inside Lufthansa.”

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