Deutsche Lufthansa AG on Monday signalled its readiness to take a tough stance in a wage dispute, even risking strikes by pilots and other employees, as the German airline widens a cost-cutting drive to cope with cutthroat competition.
“We are ready to go for further strikes, including with pilots, if necessary” to achieve the needed flexibility, Lufthansa chief financial officer Simone Menne told a press briefing in New York on Monday.
Europe’s established airlines, hit by competition from discount carriers and Gulf rivals, are in the midst of dramatic revamp, with Air France-KLM shedding about 5,000 jobs, Lufthansa cutting 3,500 and Spanish carrier Iberia Lineas Aereas de Espana SA 3,141.
Trade union Verdi went on strike last week to push through demands for a 5.2-per-cent pay increase for 33,000 cabin crew and ground staff at Lufthansa Cargo, Lufthansa Technik, Lufthansa Systems, catering unit LSG Sky Chefs and ground crews.
Lufthansa hopes its restructuring program, dubbed SCORE, will help boost operating profit to €2.3-billion ($3-billion U.S.) in 2015 from €524-million last year.
“We are ready to go for more strikes and will not agree to short-term harmony if there is long term further burdening,” Ms. Menne said.
Lufthansa has said it wants to freeze pay and ask employees to work one hour more each week to help it remain competitive.
Lufthansa has also been in talks separately with pilot union Cockpit for nearly a year for a new wage contract. Union comments lately have signalled impatience.
In November last year, Lufthansa agreed to raise by more than 4 per cent wages of cabin crew of the Lufthansa passenger division after a bitter dispute that saw more than 1,000 flights cancelled during a busy holiday season.
But it also obtained a union concession to make the pay structure of around 18,000 stewards and stewardesses more flexible.
Lufthansa’s personnel director, Stefan Lauer, who is involved in current wage bargaining, is to leave by the end of June and German magazine Der Spiegel said on Monday he could be replaced by two executives.
Der Spiegel said Mr. Lauer’s job would be split in two. He handles human resources and Lufthansa’s other airline units.
“If indeed his job would be split up, it would imply the personnel job is demanding and onerous. It shows Lufthansa is serious in this whole restructuring,” said airline analyst Donal O’Neill of Irish stock brokerage Goodbody.
Ms. Menne also told reporters Lufthansa would definitely not be selling 100 per cent of LSG Sky Chefs and was looking to expand into hospital, school and train food, possibly with a partner.
An investment banker told Reuters in June last year that LSG, the world’s biggest airline catering company with €2.3-billion in annual revenue, could be put on the block.
Ms. Menne said an ongoing strategic review on LSG was looking at the investment necessary to expand offerings, what financing would be possible, which markets it might target and which companies could be partners, if the venture went forward.
She said she expects a decision in the summer of 2013.