In a dispute over pilot pensions and flight attendant working conditions, cockpit and cabin crews have struck repeatedly and with increasing duration over the past three months. In April, the unions Vereinigung Cockpit (VC) and Independent Flight Attendants Organization (UFO) paralyzed the carrier's flight operations for an entire week with alternating walkouts. According to the airport association ADV, nearly one million passengers were affected. Kuehne Holding, owned by major shareholder Klaus-Michael Kuehne, criticized the industrial action as an abuse of the right to strike.
Lufthansa has quantified the costs of strike-related cancellations and passenger compensation at 190 million euros to date. During the central ceremony for the company's 100th anniversary in mid-April, staff and management presented a picture of deep division - with protests by numerous employees in the streets outside the venue and sharp criticism from Lufthansa Supervisory Board Chairman Karl-Ludwig Kley from the podium in the new visitor center. The following day, Lufthansa unexpectedly announced the short-term shutdown of the struck regional subsidiary Cityline - 1,300 employees were furloughed overnight.
'Nothing at Lufthansa is as certain as the next strike,' said Henrik Pontzen, Head of ESG at Union Investment. He expressed no sympathy for the demanded massive increase in employer contributions to pilot pensions. 'It cannot be that a good year immediately leads to massive demands from pilots, while we as shareholders bear the risk alone during crises.' The fund management arm of the cooperative banks advised CEO Carsten Spohr to remain firm in negotiations, particularly regarding pilots and their top-tier salaries.
'STRATEGY IS SOUND, EXECUTION LAGS'
VC President Andreas Pinheiro held management responsible for the escalation. He argued that the board is using collective agreements as a pretext for the slow recovery from the Covid crisis, for which management itself is responsible. Consequently, management is pursuing 'chainsaw personnel policies' to force specialized unions into submission. The employer, he claimed, is accepting economic damage from strikes as part of a power-play calculation. 'We pilots are tied to this company for better or worse and have an existential interest in Deutsche Lufthansa AG being economically successful,' Pinheiro said.
Meanwhile, the company and unions are attempting to return to the negotiating table, as further costly work stoppages would come at the worst possible time. In addition to the enormous burden of strikes, Lufthansa is being hit by a massive surge in kerosene prices and fuel shortages resulting from the war in Iran, explained Ingo Speich, Head of Sustainability at Deka Investment. Lufthansa's fuel bill is set to rise by 1.7 billion euros this year. Contingency plans for kerosene shortages are already in place. 'The board has once again entered crisis mode.' Investors fear that last year's strong results - nearly two billion euros in operating profit and a ten percent dividend increase - may have been merely a temporary peak. 'Productivity is falling; delays and cancellations are becoming the norm again,' Speich said. He views the savings and modernization program at the core Lufthansa brand as the right path. 'The strategy is sound. The execution lags.'
(Edited by Olaf Brenner and Sabine Wollrab. For inquiries, please contact the editorial management at frankfurt.newsroom@thomsonreuters.com)
- by Ilona Wissenbach
