Lufthansa stuck to plans to limit pay rises and switch some staff to less generous contracts, as cabin crews prepared for strikes that could disrupt hundreds of flights and cost the company millions of euros.
German trade union UFO, which represents around two-thirds of Lufthansa‘s 19,000 cabin crew, yesterday said it would give only a few hours’ notice of strikes, making it difficult for Lufthansa to ask courts to block the action.
That prompted a 2.4 per cent fall in Lufthansa shares, the biggest drop on Germany‘s index of leading shares .
UFO head Nicoley Baublies told a German radio station that the first wave of strikes would cover only certain airports.
Like other European flag carriers such as Air France-KLM, Lufthansa is fighting to reduce costs amid rising fuel prices and tough competition from low-cost and Gulf carriers. It needs to generate more profit to pay for the €17 billion of more fuel-efficient aircraft it has on order.
The company wants to outsource staff, use cabin crew on temporary contracts and switch its employees to less generous contracts by combining its Germanwings low cost unit with its point-to-point flights within Europe – moves the union opposes.
The union wants a five per cent pay rise after three years of pay freezes and guarantees against outsourcing and the use of temporary workers. Lufthansa has offered a 3.6 per cent pay rise, but wants staff to work more hours in exchange.
Lufthansa expects two-thirds of a €1.5 billion savings plan to come from its German passenger airlines division and has already forced pay cuts on pilots at unit Austrian Airlines, by saying they could take either a new, less generous contract or leave.
“The example of Austrian Airlines shows how tough management can be in negotiations, and while they can’t legally use such measures in Germany as they did with the staff there, I would expect them to take a similarly hard stance,” Equinet analyst Jochen Rothenbacher said.
DZ Bank analyst Robert Czerwensky said he expected a lengthy dispute. “A long-lasting battle with the union is a good signal to the market that Lufthansa is keen to fight for cost improvements and not willing to give up easily.”