August 07, 2012
Lufthansa is facing a major roadblock in its efforts to restructure and return its short-haul operation to profitability. The airline’s cabin crew union, UFO, says more than 70% of its members at Lufthansa have participated in a strike ballot that so far has exceeded the internal quorum. The ballot will run until Tuesday night, and UFO is expected to reveal that an overwhelming majority of flight attendants support a strike.
UFO and Lufthansa have been negotiating a new collective bargaining agreement for almost one year, but talks have become more difficult since the launch of the airline’s SCORE cost-savings program. In SCORE, Lufthansa plans to improve its operating results by €1.5 billion by 2014. About €900 million is expected to come from the airline division and €600 million from internal cost savings.
Among the UFO’s demands are higher wages, which the union says have not been raised in three years, and improved travel opportunities. But the conflict centers on one of the key SCORE components: Lufthansa has started outsourcing cabin crew work to lower-paid staff at its Berlin base to enable the airline to offer lower fares in a very low-yield market. However, the practice could become a blueprint for the entire non-hub operation–all flights not serving Frankfurt and Munich. That operation is massively unprofitable, and Lufthansa is seeking double-digit improvements in unit costs.
The carrier also is looking at ways to merge non-hub flying with the operations of low-fare affiliate Germanwings, although progress is hampered by an internal dispute about which brand should prevail and how the organizations will be integrated. Should Germanwings’ significantly lower pay levels become the benchmark, Lufthansa’s staff would face serious demands for stepped-up productivity and relaxed work rules. Without union concessions, it is difficult to see how the airline can return that part of its business to profitability.
UFO says it will not go on strike immediately, but rather wait for an offer scheduled to be presented by the company next week.