Lufthansa pilots extend strike until Saturday for long-haul flights

November 24, 2016 9:23 AM EST

Planes stand on the tarmac 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

FRANKFURT/BERLIN (Reuters) - Lufthansa pilots in Germany said they will extend strike action until Saturday and target long-haul flights, further raising pressure on management in a long-running pay dispute.

One of Europe's biggest airlines, Lufthansa has already grounded nearly 1,800 flights since pilots represented by the Vereinigung Cockpit (VC) union went on strike on Wednesday, disrupting travel plans for more than 315,000 passengers.

The strike had originally been planned as a 24-hour walkout but has now been extended three times.

Lufthansa said earlier on Thursday that it will scrap 830 short- and medium-haul flights on Friday, just over a quarter of its schedule, hitting more than 100,000 travelers.

Most long-haul flights will be unaffected on Friday, it said.

On Saturday, however, all long-haul flights leaving Germany until midnight will be affected, VC announced, without being more specific.

In a statement released after trading hours, VC said comments by Lufthansa Chief Executive Carsten Spohr that the carrier's future would be on the line if pilots' wages were raised "amount to a completely exaggerated dramatization."

Harry Hohmeister, a Lufthansa board member, said cancellations for the first two days of strike action had cost the airline about 20 million euros ($21 million) and customers were making fewer bookings.

"Not only have we suffered severe damage (from the strike), but we're also noticing from mid-term booking numbers that customer behavior is changing," Hohmeister said.

Shares in the company fell 1.1 percent on Thursday, underperforming a slight gain in German blue chips <.GDAXI>.

COST SQUEEZE

The pilots' strike is their 14th walkout since early 2014. The union wants an average annual pay increase of 3.7 percent for 5,400 pilots in Germany over a five-year period from 2012. Lufthansa has offered 2.5 percent over six years to 2019.

The airline has urged the union to enter mediation, but the union said it wants to see a better offer first.

Lufthansa insists that despite a record profit in 2015, it has no choice but to cut costs to compete with leaner rivals such as Ryanair on short-haul routes and Emirates [EMIRA.UL] on long-haul flights.

It has already agreed deals with the main unions representing ground staff and cabin crew in Germany, leaving an agreement with its pilots outstanding.

"From a shareholder perspective we would rate the efforts of management to make the company financially sustainable in the long term as more valuable, than the short-term pain inflicted by the strikes," Commerzbank analysts said in a note.

Pilot strikes in 2014 cost Lufthansa 222 million euros, roughly 21 million euros per day, according to the IW Cologne Institute for Economic Research. In 2015, walkouts by pilots and cabin crew cost it 231 million euros, around 30 million per day.

Despite the row with its German pilots, Lufthansa is also moving forward with plans to expand lower cost operations, using a Eurowings unit based in Austria. It is in talks over bringing operations from Air Berlin and Brussels Airlines into the Eurowings platform.

The row is mirrored at rival Air France-KLM , which has also seen pilot strikes in France over plans to lower costs.

(Additional reporting and writing by Caroline Copley and Andreas Cremer in Berlin; Editing by Alexander Smith and Susan Fenton)



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