As Lufthansa launches an interim cost-cutting campaign to offset a weak first half performance, Swissair aims to cut salaries by 5 per cent after agreeing a pay deal with its pilots.

Lufthansa is looking to save DM190 million ($130 million) in the second half of 1996, following a disappointing first half which saw pre-tax profits drop to DM100 million from DM189 million in 1995. The carrier blames the result on a weak economy, aggressive pricing by competitors and the fire at Düsseldorf airport earlier this year. The measures focus mainly on cutting capacity, including removing two A310-300s from Middle East services this winter and taking five aircraft out of service in Europe by November.

Lufthansa aims to introduce new working conditions in October, including a wage freeze, and plans to replace 10 per cent of its German cabin crew with foreign employees at lower wages. This drive is part of its wider 'Programme 15' cost cutting programme aimed at reducing costs per ASK from 17 pfennigs to less than 15 pfennigs by 2001, and boosting annual revenues by DM1 billion.

Meanwhile, Swissair's pilots gave the struggling carrier a boost in its drive to find SFr500 million ($415 million) in savings by 1998 under its Win programme. The pilots' union signed a three-year agreement, which should produce annual savings of SFr60 million, including a 5 per cent wage cut and a reported 25 per cent productivity increase.

The carrier, under pressure from falling yields and rising costs, then told other employees they would have to take a cut in salary to achieve Win's labour cost target.

Lois Jones

Source: Airline Business