Bloomberg News

Lufthansa Flight Attendants Plan Strike Over Pay Tomorrow

August 30, 2012

Lufthansa Cabin Crew Plans Strike Tomorrow in Contract Dispute

Deutsche Lufthansa AG fell as much as 0.7 percent to 9.64 euros and was trading down 0.5 percent at 9:11 a.m. in Frankfurt. Photographer: Hannelore Foerster/Bloomberg

Deutsche Lufthansa AG (LHA)’s main cabin crew union said it plans a strike in Frankfurt tomorrow from 5 a.m. to 1 p.m. in the first walkout of a 13-month wage dispute.

The Unabhaengige Flugbegleiter Organisation announced the timing of the expected stoppage in a statement today, without saying how many employees would participate.

“The strike will take place in the location where the responsibility for the current Lufthansa disaster began,” UFO said earlier on its website. Frankfurt is the airline’s main hub.

The dispute centers on the pace of raises and whether separate pay scales apply to some groups of workers as Lufthansa, Europe’s second-biggest airline, implements a 1.5 billion-euro ($1.9 billion) savings program dubbed Score. The Cologne, Germany-based company, which employs 120,000 people worldwide, has already announced plans to scrap as many as 4,500 jobs in administration and catering.

“We are preparing for different scenarios and will try to minimize the effects as much as possible,” Boris Ogursky, a Lufthansa spokesman in Frankfurt, said today by phone. “We will also try to inform passengers as soon as possible about flight disruptions.”

The company has set up a website outlining flight schedules in the event of a walkout.

Lufthansa fell 0.5 percent to 9.76 euros in Frankfurt.

Union Demands

UFO is seeking a 5 percent pay raise backdated to the start of 2012. Nicoley Baublies, head of the union, told journalists Aug. 28 that the airline’s proposal amounted to a 1.5 percent annual increase and would have eroded wages by 1,300 euros a month after inflation. Lufthansa countered that it was ready to offer a raise totaling 3.5 percent over time, and all flight attendants would have received higher pay.

The union also opposes Lufthansa’s demand that flight attendants assigned to its expanding Berlin hub work 9 percent more hours than employees elsewhere for the same wages, and has objected to its use of temporary workers there. In addition, the parties were unable to agree on whether to protect employees after 2013 from being transferred to low-cost divisions under cheaper pay contracts, according to UFO.

A walkout “will have a massive impact” on earnings, though the airline needs to stick to its stance to restore profitability, Peter Oppitzhauser, a Zurich-based analyst at Credit Agricole with an outperform recommendation on Lufthansa stock, said by phone Aug. 28.

Earnings Risk

Based on analysts’ earnings estimates and effects of previous strikes, each day of a work stoppage would potentially cut Lufthansa’s full-year operating profit by 4 percent, Oppitzhauser said. The airline is forecasting operating profit in 2012 in a “mid-three-digit” million-euro range, excluding reorganization costs of as much as 200 million euros.

The union said Aug. 8 that 81 percent of its members voted in favor of a walkout after earlier talks faltered. UFO will stage “limited strikes” in the short term and outline plans for an open-ended work stoppage in coming weeks, Baublies said Aug. 28.

The contract dispute contrasts with an agreement that the Ver.di union reached with Lufthansa on Jan. 26 to secure a 3.5 percent raise for 33,000 ground, cargo and technical employees.

About 19,400 flight attendants are affected by the wage talks, according to UFO, which has declined to specify how many members it has at the airline.

To contact the reporter on this story: Alex Webb in Frankfurt at awebb25@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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