By William Moore,
International Business Writer
This past Monday, Lufthansa, the premiere airline carrier in Germany, announced the cancelation of 929 flights, affecting around 113,000 passengers, as CNN Money reports. Monday’s cancelations represent only the most recent in a series of cancelations that have resulted from the longest strike in Lufthansa’s history being carried out by the airlines’ cabin staff. As USA Today reports, Lufthansa has been seeking to cut costs in recent months to become more competitive with other European low-cost airlines, as well as rapidly growing Persian Gulf airlines such as Emirates, Etihad, and Qatar Airways. Part of the company’s efforts to reduce costs include the modification of several of its long-standing pension policies, increasing the number of years it takes for current employees to reach the level of benefits that they would otherwise receive.
While cutting operational expenses such as pensions may prove profitable to the company in the long run, it has cost them a very large amount of money in recent months. According to NBC News, Lufthansa is losing around €10.8 million a day in business as a result of the strike, which was still ongoing as of Wednesday this week, but this is not the first strike the company has faced in recent months. The company has also been dealing with a large number of strikes from their pilots, 13 in the past 18 months. While Lufthansa’s pilots and cabin staff are represented by different unions and therefore negotiate separately, combined losses from strikes by both groups have already cost the company around €130 million so far this year, which translates to just under $140 million.
The strikes have been costing the company so much, that after the largest round of cancelations on Monday, the company offered every cabin staff worker a one-time bonus of €3000 ($3,228) to immediately end the strike and reenter negotiations as Bloomberg Business reports. The effort apparently was met with disdain on the part of the union, who saw the offer as an affront, considering the larger goal they were trying to achieve.
Despite their high costs, Lufthansa may be in a prime position to go through these sorts of difficulties with their staff right now. Given the low cost of fuel at the moment, recent operational expenses for Lufthansa have been lower than expected. Last month, the company increased its earnings forecast for 2015 to reflect this fact. The company warned that the “tailwind of low oil prices” may be short-lived and said it will focus on continuing to cut costs to become more competitive, as CNN Money reported. To the workers in Lufthansa’s fleet who stand to see their pensions cut, however, this appears to be a rather callous move on the part of Lufthansa management, deciding to cut employee benefits as they increase profit projections.
Amongst inconvenienced travelers, the majority seemed to be in support of Lufthansa as opposed to the striking cabin crews. As one inconvenienced traveler in Frankfurt told NBC News, “I have no sympathy for the cabin staff…I work at a large corporate and had to go through the same process. The economy has changed and people need to accept that employment agreements made 20 years ago are no longer feasible.” Time will tell whether Lufthansa can reach an agreement with the cuts that they want, or whether they will have to cut a deal with the cabin crew’s union.
A version of this article appeared in the Tuesday, November 17th print edition.
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