Lufthansa makes new offer to end costly pilots' strike

November 25, 2016 4:15 AM EST

A worker walks past a closed check-in area during a pilots strike of German airline Lufthansa at Frankfurt airport, Germany, November 23, 2016. REUTERS/Ralph Orlowski


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By Peter Maushagen and Caroline Copley

BERLIN (Reuters) - German airline Lufthansa said it had made a new offer to try to break the deadlock in a long-running pay dispute with its pilots who have been on strike since Wednesday.

This week's walkout -- the 14th since early 2014 -- has already grounded some 2,600 planes and affected more than 315,000 passengers. Lufthansa has said the disruption has started to hit medium-term bookings.

Lufthansa said it had offered to increase wages by 4.4 percent in two installments, as well as a one-off payment equal to 1.8 months' pay.

The German airline also said it had offered to create 1,000 jobs for junior pilots and up to 600 pilot traineeships over the next five years. It said it could enter mediation talks with the union on Nov. 29.

In return, pilots would have to agree to a change to their pension scheme in which Lufthansa would only guarantee paid-in contributions. Cabin crew and ground staff have already agreed to these changes.

Bettina Volkens, head of human resources at the airline, said the changes would help the airline to save money.

Pilots had been threatening to extend the strike beyond Saturday, raising concerns among investors at the growing cost to the company and the wider impact on Europe's largest economy.

There was no immediate response from the Vereinigung Cockpit union. The union wants an average annual pay increase of 3.7 percent for 5,400 pilots in Germany over a five-year period backdated to 2012.

Lufthansa says it has to cut costs to compete with leaner rivals such as Ryanair on short-haul routes and Emirates [EMIRA.UL] on long-haul flights, despite making a record profit n 2015.

Lufthansa pilots are well paid by industry standards. A pilot at Lufthansa earns on average 180,000 euros ($190,000) a year before tax, though a captain on the highest pay level can earn as much as 22,000 euros a month before tax.

Lufthansa had earlier said it would be forced to cancel a further 137 flights on Saturday, including 88 intercontinental flights, affecting some 30,000 travelers. Some short- and medium-haul flights would also be affected, it said.

LONG-TERM DAMAGE?

Passengers at Frankfurt airport on Friday were running out of patience.

"It's not pleasant," said Lufthansa passenger Dieter Eidt who was booked on a flight to Rome and faced a lengthy delay.

"I believe that they are demanding something that can't be fulfilled and which is unjustified," Eidt said of the pilots.

Lufthansa has put the cost of the stoppage at around 10 million euros ($11 million) per day. However, the airline could take a longer-term hit if the strike prompts customers to shun Lufthansa and switch to rival airlines.

Travel search firm Kayak said nine percent fewer visitors to its site on Wednesday and Thursday had opted for a Lufthansa flight compared to the previous week.

"Many people are looking for alternatives," said Julia Stadler-Damisch, regional director at Kayak. But she said she did not expect the airline's reputation to suffer in the long run.

Investors were not so sanguine.

Shares in Lufthansa, down more than 13 percent this year, slipped lower on Friday as investors fretted over the prospect of stoppages dragging on.

"The name Lufthansa stands for safety, punctuality, reliability," said Michael Gierse, a fund manager at Lufthansa shareholder Union Investment. "One has to wonder how much of the last two values still remain after the strike."

(This story was refiled to fix link to Emirates company code)

(Additional reporting by Reuters TV in Frankfurt and Sabine Siebold in Berlin; Editing by Keith Weir)



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