Strike Grounds Most Lufthansa Flights

Strike Grounds Most Lufthansa Flights
http://www.nytimes.com/2013/04/23/business/global/strike-grounds-most-lu... By NICOLA CLARK
Published: April 22, 2013 PARIS —
A widespread strike all but grounded the German flag carrier Lufthansa on Monday, affecting around 150,000 passengers around the world amid a battle over wages as the airline pushes ahead with a $2 billion restructuring program. The airline, Europe’s largest by passengers carried, said it had to cancel all but 32 of its 1,700 scheduled flights worldwide after unions representing more than 33,000 ground crew and other staff, half its German work force, called the action. The full-day “warning strike” at Germany’s biggest airports — including Frankfurt, Munich and Hamburg — was the second such action in a month by members of the country’s powerful services union, ver.di. The union is seeking a 5.2 percent wage increase, job guarantees and a shorter, 12-month contract period. The contract talks come as Lufthansa, like other large network carriers across Europe, struggles to keep a lid on operating costs. In the European market, Lufthansa and its peers are losing market share to leaner and nimbler rivals like Ryanair, easyJet and Air Berlin. On long-distance routes, they are being squeezed by rapidly expanding Middle Eastern carriers like Emirates and Etihad. Lufthansa said it had managed to operate a small number of long-distance flights Monday, most of them to U.S. destinations. At Frankfurt, where Lufthansa is based, only 6 of 50 scheduled intercontinental flights took off: to Kennedy International Airport in New York, as well as Philadelphia and Atlanta in the United States; Madras, India; Nagoya, Japan; and Kuwait City. From Munich, only three trans-Atlantic flights — to Charlotte, North Carolina; Chicago and Miami — departed out of 17 scheduled. All three daily flights to the United States from Düsseldorf — to Newark Liberty International Airport, Chicago and Miami — operated as scheduled. The airline said it had managed to warn roughly 100,000 — or two-thirds — of its affected passengers over the weekend and was making arrangements to rebook them on other flights or refund their tickets. The delays for Lufthansa passengers came as some flights in and out of New York, Washington and other U.S. airports were delayed by several hours Monday as federal budget cuts led to furloughs of air traffic controllers. The U.S. Federal Aviation Administration has begun restricting air traffic at peak times because it has too few controllers to safely monitor busy air corridors. The walkout in Germany on Monday was the latest in a series of labor disputes at Lufthansa that began last year and has been fueled by a restructuring plan, announced last May, that seeks to shave more than €1.5 billion, or almost $2 billion, from annual costs by 2015. The plan foresees the elimination of around 3,500 jobs — about 2,500 of them in Germany — largely through attrition and voluntary, early retirements. Lufthansa’s global work force currently stands at around 117,000. Staff costs have risen steadily at Lufthansa over the past decade and now represent more than 22 percent of the airline’s total operating costs as a share of revenue — on a par with its fuel bill, which reached €7.4 billion last year. By contrast, labor costs as a share of revenue are less than 10 percent at Europe’s largest low-cost carrier, Ryanair, and 12.4 percent at easyJet, according to the Center for Aviation in Brussels. Claudia Lange, a Lufthansa spokeswoman, said the strike, which was announced Friday and in which roughly 12,000 staff participated, was unexpected, given that the airline had improved its pay offer during the most recent round of negotiations, which ended April 17. She said management’s latest offer included raises of up to 3 percent, but sought to extend the contract period to 29 months in order to provide more predictability in wage costs. Ver.di’s most recent contract with Lufthansa was for 22 months. “It is surprising that the union is going on strike at all,” said Ms. Lange, who said she could not recall the last time Lufthansa had faced such a widespread labor-related disruption. “Until now, the negotiations have been fairly constructive.” The airline’s offer, she added, also includes a one-time bonus payment equivalent to 1 percent of annual wages if the company achieves an operating profit margin of 3 percent in 2014. The margin was 1.7 percent last year, down from 2.9 percent in 2011 and 3.9 percent in 2010. Martina Sönnischen, a ver.di spokeswoman, dismissed Lufthansa’s offer as “scandalous,” saying that it still represented a small fraction of what the union had demanded and failed to address the question of job guarantees. “This is not a starting point for a serious discussion,” she said. Ms. Sönnischen declined to say whether the union planned further work stoppages in the run-up to the next round of talks, slated for April 29-30. Tactical warning strikes of several hours’ duration are commonly used by German unions during wage negotiations as a means of increasing the pressure on employers. Last month, a half-day warning strike by ver.di led to the cancellation of 700 Lufthansa flights after a previous round of talks ended without an agreement. The warning strike Monday was unusual in that it lasted a full day. Ms. Lange said the company predicted that the financial impact of the strike would be in the “two-digit millions” of euros. Lufthansa’s restructuring efforts have begun to bear fruit despite a weakening European economy and stubbornly high fuel prices. The company reported a net profit of €990 million for last year, bolstered by asset sales, compared with a loss of €13 million in 2011. But it suspended dividend payments to shareholders in order to make more cash available to finance its turnaround. Lufthansa said that flights would resume Tuesday, but that passengers should expect significant delays until at least early afternoon.

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