Lufthansa has reached an agreement with German flight attendant union UFO following more than 12 months of negotiations over changes to cabin crew pay structures and working conditions.
The agreement - which is in effect from January 2013 until the end of 2014 - was reached with the help of arbitrator Bert Rürup, a former government economic advisor. Rürup became involved after talks broke down in August, leading to two months of widespread flight attendant strikes.
Management and the union agreed to lump sum payments across different salary levels, resulting in a total pay volume increase of 3.95% for approximately 18,000 flight attendants.
Lufthansa accepted UFO's demand to abolish so-called preliminary pay scales for around 6,000 staff members, which should particularly benefit employees on lower salaries. The new policy will take effect in one year, with the airline also negotiating higher productivity levels.
For its part, the union reluctantly agreed to introduce a lower pay scale for future staff which, according to Lufthansa, will ensure the carrier's "ongoing competitiveness in the long-term".
UFO states that the new pay scale was a "painful" compromise. Although it offers salary increases "during the first years of employment" and a company profit-based bonus system, the union insists that the new structure would be "inacceptable" in its own right and poses an "enormous challenge". This is because it could be seen by other airlines as an incentive to reduce cabin crew pay, UFO says.
Both sides also agreed to changes to the bonus system as well as the introduction of a yearly work-time model, which allows the airline to employ new staff on a seasonal basis when traffic volume is high.
Lufthansa ruled out compulsory redundancies until the end of 2014 even though the airline maintains that it faces "existing and further anticipated excess capacities".
For mainline cabin crew willing to move voluntarily across to Lufthansa's budget subsidiary, Germanwings, both sides agreed to "safeguards" that protect existing employees' pay and benefit levels.
Germanwings will take over Lufthansa's European network on 1 January 2013, except for flights operating to or from the flag carrier's hubs in Frankfurt and Munich.
Lufthansa says that the cabin crew strikes in August and September led to losses of around €33 million ($42 million).