Lufthansa Reaches Crisis Deal With Union To Cut Costs
German airline Lufthansa has said that it has reached a new deal with trade union Verdi to cut €200 million in costs in return for making no compulsory redundancies in 2021.
Lufthansa warned last week that it will burn through more cash in the fourth quarter than in the third and that further restructuring measures will weigh on its results as it struggles to cope with the effects of the COVID-19 pandemic.
The airline and its subsidiaries, Eurowings, Swiss, Austrian and Brussels Airlines, are slashing their schedules, fleet and staff, with air travel not expected to recover to pre-pandemic levels before 2025. It aims to cut 22,000 full-time jobs.
"We have taken a first important step towards reducing ground staff personnel costs," HR head Michael Niggemann said in a statement. "However, we cannot slow down our efforts in continuing to work on crisis-management measures."
The deal with Verdi comes after months of talks that were repeatedly broken off. Verdi accused the company of seeking to cut jobs even after it took a €9 billion government bailout.
Lufthansa said that 24,000 ground staff will forgo their usual Christmas bonuses in 2020 and 2021 as well as vacation bonuses until the end of 2021. The company will also cut the amount it tops up government payments to staff working short-time.
Together these measures will cut personnel costs by up to half in 2021, depending on the total hours worked.
In return, Lufthansa promised not to make forced layoffs in 2021, while offering partial retirement and voluntary redundancy programmes. It will continue talks on long-term cuts in labour costs from January 1, 2022 when government compensation ends.
Verdi said that its members still have to vote on the deal.
On Wednesday November 11, the Vereinigung Cockpit union representing Lufthansa pilots offered to contribute €450 million to cost cuts by extending a deal to trim salaries and pensions that currently ends at the end of this year until June of 2022.
Number Of Pilots
The airline has approximately 5,000 pilots, many of whom are currently receiving short-time compensation.