Bloomberg News

Lufthansa Cancels Most Flights Due to Ground-Crew Strike

April 22, 2013

Lufthansa All But Grounded by Ground-Crew Strike in Wage Dispute

Lufthansa customers traveling within Germany can exchange tickets of canceled flights or missed connections for rail-travel vouchers. Photographer: Ralph Orlowski/Bloomberg

Deutsche Lufthansa AG (LHA) suspended almost its entire timetable for a full day as a strike over pay crippled operations at Europe’s second-largest airline and upset travel plans for 150,000 people.

Lufthansa grounded 1,755 flights, with only about 20 of 1,650 planned European services and 12 of 70 long-haul trips taking off. The Cologne-based company said it won’t be able to quantify the financial impact until it’s clear how many people rebook and cancel or need to be looked after when stranded.

Today’s protest comes as Lufthansa seeks to push through its most ambitious-ever efficiency drive to boost margins and fund fleet renewal. Germany is suffering the worst upheaval in air travel since April 2010, when Iceland’s Eyjafjallajökull volcano erupted, grounding 100,000 European flights in six days.

“Motivation to strike seems to be high, allowing the union to flex their muscles,” said Jochen Rothenbacher, an analyst at Equinet in Frankfurt who predicts the walkouts could cost 20 million euros ($26 million) in operating losses and complicate Lufthansa’s efforts to extract the targeted savings. Still, “investors may see this as a sign Lufthansa will stand its ground in the negotiations despite the pressure,” he added.

Lufthansa rose 2.6 percent before closing 1.4 percent higher at 14.11 euros in Frankfurt, the site of the carrier’s main hub. The stock has lost 1 percent so far in 2012.

Pay Claim

The airline is seeking to lower expenses and increase sales to lift operating profit to a record 2.3 billion euros by 2015, a plan that includes the elimination of 3,500 jobs.

The Ver.di union, which represents about 33,000 Lufthansa employees including catering, freight and maintenance personnel, is seeking a 5.2 percent wage increase. The union is also pressing for an agreement to exclude firings.

In September last year, a strike by cabin crew caused the airline to cancel more than 50 percent of daily services, or more than 1,000 flights. On Feb. 22, 2010 a strike by pilots wiped out two-thirds of all connections.

Lufthansa’s operations were also hampered by a walkout among apron controllers in Frankfurt in February last year, and by a security-guard strike at various German airports this year.

‘Strike Industry’

“The transportation industry has morphed into a strike industry, highly damaging our image,” Stefan Lauer, Lufthansa’s board member for personnel, told German television ARD today. “We have to endure a different strike every three months these days, not only by our own unions but also from outside.”

Today’s strike is the second in the current dispute after, when Ver.di staged a half-day walkout April 19 forcing Lufthansa to scrap more than 760 flights, most of its short-haul service.

“The good thing about a full-day strike is that the planes will be where they are supposed to be tomorrow morning, meaning Lufthansa will be able to quickly get back to their normal schedule,” analyst Rothenbacher said.

Long-haul flights operating as scheduled today include six from Frankfurt to destinations including Madras in India, three from Munich -- to cities including to Charlotte and Chicago -- and three from Dusseldorf.

Lufthansa’s Swiss unit lists 13 canceled flights on its website, while the Austrian Airlines (AUA) division said yesterday that services would run as scheduled.

Star Allies

Among Lufthansa’s Star Alliance partners, SAS AB (SAS) halted 56 flights in anticipation of disruption, Check-in.dk reported. United Continental Holdings Inc. (UAL)lists Lufthansa code-shares as canceled, while Singapore Airlines Ltd. (SIA)said services weren’t affected, with some fuller than usual as passengers re-booked.

German rail operator Deutsche Bahn AG (DBHN) added additional trains, with Lufthansa customers traveling within the country able to exchange tickets for rail-travel vouchers.

A fourth round of talks between Lufthansa and unions is scheduled for April 29 and 30, and a fifth for June. If the negotiations fail, Ver.di will hold a vote on unlimited strikes, Behle said, adding that the labor group isn’t interested in mediation, which solved the cabin crew conflict in September.

Juergen Pieper, an analyst at Bankhaus Metzler in Frankfurt, said workers will most likely settle for a pay increase of 3.5 to 4 percent, and that Lufthansa has realized already that any job cuts will have to be voluntary.

Because of the strike, the airline has already canceled nine flights for tomorrow, according to its website.

Lufthansa joins a long list of carriers that have faced strikes in recent years. Madrid-based Iberia, sister unit of British Airways (IAG), scrapped almost 40 percent of its schedule in a five-day action over job cuts in February, re-booking 85 percent of the 70,000 passengers affected with other Oneworld carriers.

In Australia, Qantas Airways Ltd. (QAN)Chief Executive Officer Alan Joyce grounded the entire fleet in 2011 at a cost of more than $100 million in a spat over pay and jobs.

In 1998, most of Air France (AF)’s 3,200 pilots staged a nine- day strike that forced it to cancel 75 percent of flights in the week heading up to the World Cup soccer championship.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net

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


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