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Lufthansa Ground Staff Agree Pay Deal After Strike

By Dave Simpson

Ground staff of Germany's Lufthansa and management have reached a pay deal after a third round of negotiations, averting further walkouts during the busy summer travel season, labour union Verdi and the carrier said late on Thursday 4 August.

Details

Airlines across Europe are facing labour strife this summer as the rapid recovery in tourism has led to staff shortages and soaring inflation has prompted employees to demand higher wages.

The pay dispute at Lufthansa resulted in a strike last week that caused the cancellation of more than 1,000 flights.

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The carrier still faces uncertainty over possible walkouts by its workers. The carrier is due to hold talks next week with pilots, who have already voted in favour of strikes.

After two years during which the global COVID-19 pandemic held back wage increases in the aviation sector and inflation now hovering around 8%, the deal announced late on Wednesday will mean wage increases in real terms, Verdi said.

It includes a pay hike of 200 euros a month from July 1 this year, plus an increase by 2.5% or at least 125 euros a month from Jan. 1 next year and another 2.5% from July 1, 2023.

It will mean bigger increases for lower-income staff and smaller ones for workers in higher income brackets. For instance, for staff working at check-in counters at airports it will mean total increases of between 13.6% and 18.4%, depending on how long they have been with the company, Verdi said.

Lufthansa added that the deal would mean an increase in gross base salaries of 8.3% for workers earning 6,500 euros a month and of 19.2% for those making €2,000.

Also, for lower-income workers, hourly pay will be set at €13 from 1 October, above the legal minimum of 12 euros. The union had originally demanded a 9.5% pay hike for ground staff.

"This result, which makes Lufthansa more attractive as an employer, will provide relief," Verdi negotiator Christine Behle said.

The wage agreement will run for 18 months, the parties said.

Earlier on Thursday 4 August, Lufthansa said it expected demand for short-haul flights in Europe to drive growth at its passenger airlines this year, forecasting a return to group operating profit for the full year.

Lufthansa Sees Return To Full-Year Profit As Travel Picks Up

The above news followed news that Germany's Lufthansa said on Thursday 4 August it expected demand for short-haul flights in Europe to drive growth at its passenger airlines this year, forecasting a return to group operating profit for the full year, pushing its shares higher.

Travellers have returned to the skies following COVID-19 pandemic-related travel restrictions in 2020 and 2021, helping airlines, such as Lufthansa, Air France-KLM AIRF.PA and British Airways-owner IAG IAG.L to return to profit this summer.

Lufthansa said bookings for August to December were now at an average of 83% of the pre-pandemic level, and it hoped that business travel bookings would reach 70% in the fourth quarter.

Chief Executive Carsten Spohr said the airline group was seeing more and more wealthy people who were willing to spend money on hotels, rental cars, expensive restaurants as well as air tickets.

"These people are less sensitive to economic up- and downturns," he said.

Lufthansa now expects to generate full-year adjusted operating profit (EBIT) of more than 500 million euros ($510 million), bouncing back from last year's 2.3 billion euro loss.

Analysts are even more optimistic, on average predicting 569 million euros, according to a consensus published on Lufthansa's website.

Shares in the carrier jumped more than 5% on Thursday.

INDUSTRIAL ACTION

The airline industry, particularly in Europe, has struggled to cope with the rapid rebound in demand, with huge queues building at many airports because of staff shortages, prompting last-minute cancellations and travellers' frustration.

The travel chaos has led airlines to trim capacity, with Lufthansa cancelling more than 2,000 flights this summer. It said it expected to offer about 80% of pre-crisis capacity in the third quarter, less than previously planned, and 85-90% in 2023.

That should, however, help it markedly improve quarterly adjusted earnings before interest and tax (EBIT) compared with the second quarter, it said.

Lufthansa reported adjusted EBIT of 393 million euros for the three months through June thanks to booming demand for air cargo flights, up from a year-earlier loss of 827 million euros.

Its passenger airline business reported an adjusted loss before interest and tax of 86 million euros in the quarter because of costs related to flight disruptions.

Lufthansa still faces uncertainty, though, from possible walkouts by its workers. Management was in talks on Thursday with ground staff, whose one-day strike last week forced the airline to cancel more than 1,000 flights.

One day of strikes costs Lufthansa 30 to 35 million euros in lost revenues.

The carrier is also due to hold talks next with pilots, who have already voted in favour of industrial action.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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