Lufthansa headed for worst pilot strike on hard-line pay stance

[FRANKFURT] Deutsche Lufthansa AG refused to give in to pilot demands for a higher wage offer, with their union now set to extend a walkout to Tuesday and Wednesday this week making the current conflict the longest ever protest by cockpit crews at the German airline.

Pilots at the mainline Lufthansa brand will strike on short-haul services on Tuesday and expand the protest to also include intercontinental flights on Wednesday, the Vereinigung Cockpit union said after a Sunday meeting with management ended without progress. Including the four days of strikes last week, the protest is set to be the longest in the company's history, surpassing an four-day walkout in March 2015.

"There still is no negotiable offer from Lufthansa, so the industrial action must continue," union spokesman Joerg Handwerg said in a release on Sunday.

The current protest has so far led to about 2,800 flight cancellations, disrupting travel for around 350,000 people. If the strike continues as planned, it may cost the airline about 45 million euros (S$68.57 million), based on estimates from the company. Lufthansa said it will publish details about the impact of Tuesday's and Wednesday's protest by 2 pm in Frankfurt on Monday.

A long-running spat over wages, working conditions and the role of discount unit Eurowings within the group escalated last week after Chief Executive Officer Carsten Spohr sought to block what started with a single-day walkout.

When a Frankfurt labour court dismissed the case and an appeal failed, Vereinigung Cockpit retaliated by extending the protest. The CEO has refused to cave in to wage demands as he seeks to trim costs to weather intensifying competition from budget rivals such as Ryanair Holdings Plc.

Lufthansa shares fell 2.7 per cent to 12.28 euros at 10.01am in Frankfurt, extending the stock's decline for the year to 16 per cent.

Vereinigung Cockpit is seeking a 20 per cent raise for its members spanning the period from 2012, when the last accord expired, through 2017, equivalent to 3.7 per cent a year. Lufthansa has offered 2.5 per cent for a six-year period, and last week reiterated its willingness to lift that to 4.4 per cent plus a bonus payment, provided the pilots agree to concessions in retirement benefits, seniority bonuses and other perks.

Further escalating tensions, Mr Spohr responded to the extended strikes last week by reviving a two-year-old legal case seeking 60 million euros (S$91.43 million) in damages from the union related to an earlier walkout. Vereinigung Cockpit called the move an attempt to destroy it.

Lufthansa has said the protests cause about 10 million euros in damages on days when both continental and long-haul flights are affected. The airline has had to book 4,000 hotel rooms for stranded passengers and set up 400 camp beds at its Frankfurt hub for people due to catch connecting flights. Meanwhile, with Christmas just four weeks away, extended protests could hurt forward bookings into the busy holiday season.

BLOOMBERG