PPRuNe Forums - Lufthansa and Pilots Agree to Pay Raise

June 8, 2001

Lufthansa, Pilots Reach Pay Pact,
Averting Further Labor Unrest
Associated Press

FRANKFURT -- Lufthansa and its pilots reached a pay agreement Friday, ending an ongoing dispute that had triggered two costly pilots' strikes and threatened to bog down Europe's second-largest airline in months of labor unrest.

Under the agreement, the pilots will receive a 14.8% base-pay increase in 2001, as well as a profit-sharing component of two extra months' pay, which tacks on an additional 16.7% increase this year, the airline said. The airline and pilots unions, Vereinigung Cockpit, agreed to a mediator's wage proposal, with a contract length of three years and three months.

Lufthansa said the accord will cost the German flag carrier 230 million marks ($100 million or 119.6 million euros) this year.

"It was Hercules' work, but it's done," said Georg Fongern, spokesman of pilots' union Vereinigung Cockpit.

News of a settlement helped push Lufthansa's shares up 1.1% to 22.80 euros in afternoon trading in Frankfurt.

Pilots staged 24-hour strikes twice in May to press demands for a pay increase -- forcing the German flag carrier to cancel hundreds of flights each time. But the union had pledged to postpone the weekly walkouts during a mediation effort by Hans-Dietrich Genscher, a former German foreign minister.

The union, which represents 80% of the airline's 4,200 pilots, agreed to call in Mr. Genscher after direct talks with the German airline broke down May 22.

Pilots had been demanding a 24% wage increase to achieve parity with competitors.

Before Friday, the airline had said its last offer amounted to a 30.3% raise -- including performance-based pay -- in the first year of a four-year contract. Excluding performance-based pay, Lufthansa said that offer would have boosted salaries 13.6%.

The labor dispute has been an embarrassment and financial liability for Lufthansa, which is struggling to shore up a sagging bottom line. The first walkout alone, on May 11, set the company back between $23 million and $32 million.

In April, Lufthansa was hit by first-quarter operating profits that fell 94%. At the time, chief financial officer Karl-Ludwig Kley said the company's goal of achieving flat earnings was «looking more and more ambitious» because of the ongoing dispute, and urged a quick resolution.