While Lufthansa is hopeful of operating nearly all its scheduled flights on 1 December as the latest walkout by pilots draws to an end, the strain on its services and labour relations continues to take a toll amid its long-running efforts to secure cost-efficiencies.
A two-day strike by pilots represented by the Vereinigung Cockpit union, which compounded the disruption of a four-day stoppage the previous week, is due to end tonight.
The German carrier has stepped up its efforts to break the deadlock by offering to start mediation based on a pay rise alone. An earlier proposal had involved linking mediation on pay to savings demands in other areas - something the union has baulked at.
The Star Alliance carrier estimates that the walkouts have cost it around €10 million ($10.6 million) per day. It says it has cancelled about 4,450 flights in total, which affected more than 525,000 passengers, across the stoppages on 23-26 November and and 29-30 November.
While the strike action covered both short- and long-haul flights only on certain days, the airline’s operations came temporarily to a near standstill. Lufthansa notes it was able to operate only “few” mainline flights with pilots from management and volunteering flight crew members.
The group’s other airlines – which include Austrian Airlines, Brussels Airlines, Swiss, regional unit CityLine and budget division Eurowings – and Lufthansa Cargo were not covered by the strikes action. However, Lufthansa Cargo and Eurowings’ operating unit Germanwings are covered by the same disputed labour agreement as the mainline pilots.
The union indicates that it could call further industrial action with a notice of at least 24h.
This though marks only the latest flare up between management and pilots. The two sides have been in talks about a new labour contract for nearly five years. The last collective agreement expired in 2012, but terms have since remained in place in absence of a new deal.
The dispute covers pay and a range of other topics, including work and pension terms. A sore point is management’s plan to transfer the defined-benefits company pension scheme to a defined contributions-based system.
For flight attendants and ground personnel, Lufthansa has separately reached collective agreements which include a change to a new pension scheme. But the flight attendant deal, too, was reached only after a long and bitter dispute with cabin crew union UFO, which included industrial action in 2015.
Perhaps the most contentious issue is Lufthansa’s expansion of low-cost unit Eurowings, part of the carrier's response to tackle its cost-base in the face expanding low-cost carrier competitors. The union is opposed to the budget division becoming a competitor to the mainline.
When management unilaterally terminated in late 2013 a transitional pay agreement for pilots who retire early on medical grounds, the union started industrial action that led to a total of 13 walkouts throughout 2014 and 2015.
Lufthansa succeeded in stopping the strikes through legal action because, it argued, the union had used the transitional pay termination as a pretext to oppose the airline’s business strategy. Furthermore, management made preparations to sue the union for around €60 million in compensation of losses relating to industrial action in 2014.
While the union asserts the compensation claim is targeted at destroying its standing, Lufthansa Group chief executive Carsten Spohr said in the past that the case has served as an instrument in handling relations with the union.
Management and union representatives have met for multiple discussions over the last year. Union board member Jorg Handwerg, speaking to FlightGlobal prior to the latest offer from Lufthansa, said that there have been three attempts to reach comprehensive agreements that covered several areas of dispute, and the two sides came close to solutions. But he asserts all three proposals were ultimately rejected by the executive board. “Three times we have tried it, three times the group executive board turned the thumb down in the end," he said.
As a result, he adds the union has resorted to “classic” labour negotiations of tackling the separate topics on an individual basis.
On 25 November, the airline published an offer to start mediation on all disputed issues based on a pay rise and cut-backs in other areas, such as pensions. The union responded that the proposed pay rise would be overcompensated by the savings and dismissed the proposal as a PR stunt. But in its latest offer from 30 November, Lufthansa has proposed to start mediation on a similar pay rise offer that “is not linked to any other terms or conditions”.
One factor in the standoff is union determination to deal directly with Spohr.. After the four-day strike a week ago – the first walkout in more than a year – representatives from the airline and union gathered for a “top-level” meeting on 27 November that been arranged at short notice. Spohr did not take part in that meeting or any previous labour negotiations, the union confirms.
Handwerg says the union wants to directly talk with Spohr, arguing previous negotiation efforts with the airline’s representatives were thwarted by the executive board despite good progress between the union and airline teams. “We think if the negotiators have no authority to finalise a deal... it makes no sense to continue talking with the negotiators. Instead, we need [to talk to] the person who can give the thumbs up or down in the end,” says Handwerg.
In the union’s view, Spohr will only join talks if the pilots were to give up their demands.
Lufthansa dismisses the view that Spohr would only engage in direct talks if the unions were to admit defeat. But when asked by FlightGlobal, the airline would not be drawn to say whether Spohr is open for such discussions.
The German carrier is of course far from the only European network carrier which has been battling with its unions in a bid to reduce its costs in the face of intense competition. A reminder of the challenges at Air France, for example, came today with news of suspended sentences given to three workers involved in the infamous ripping the shirts off the back of airline executives last autumn as tensions boiled over. A year on, and with new chief executives at the helm of the airline and the group, it is still battling to secure efficiencies at the French carrier.
It remains to be seen whether Lufthansa's latest approach can change the dynamic with its pilots union.
"We want to urgently avoid any further damage to our company and finally return to offering our passengers the kind of service they can expect from us,” said Lufthansa's chief officer hub management, Harry Hohmeister, in making today's fresh offer. Noting detaching the pay offer from other conditions is what the union has asked for, the airline says it assumes the VC will now end its strike action. But as yet the union is still to formally respond.
Source: Cirium Dashboard