Lufthansa stands firm as strikes loom

Wed Aug 29, 2012 7:49am EDT
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FRANKFURT (Reuters) - Lufthansa (LHAG.DE: Quote) stuck to plans to limit pay rises and switch some staff to less generous contracts, as cabin crews prepared for strikes from Thursday 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, on Wednesday 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 percent fall in Lufthansa shares on Wednesday, the biggest drop on Germany's index of leading shares .GDAXI.

UFO head Nicoley Baublies told a German radio station that the first wave of strikes would cover only certain airports. He ruled out any action on Wednesday and said UFO would announce in the evening whether strikes would take place on Thursday.

Like other European flag carriers such as Air France-KLM (AIRF.PA: Quote), 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 euros ($21 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 5 percent pay rise after three years of pay freezes and guarantees against outsourcing and the use of temporary workers. Lufthansa has offered a 3.6 percent pay rise, but wants staff to work more hours in exchange.

Lufthansa expects two-thirds of a 1.5 billion euro 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.

Analysts said the company is likely to take a hard line in Germany too.   Continued...

Passengers of German air carrier Lufthansa queue at a baggage drop-off at Fraport airport in Frankfurt August 28, 2012. REUTERS/Kai Pfaffenbach