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Lufthansa Offers Pilots New Contract Amid Costly Strike

REUTERS/Kai Pfaffenbach

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Ted Goodman Contributor
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Lufthansa offered its pilots a new wage proposal to end strikes that are costing the airline tens of millions of dollars each day and causing hundreds of flight cancellations.

The airline sent a proposal to the pilot’s union which would raise wages 2.4 percent this year and 2 percent in 2017. The proposal would provide pilot’s with a “one-off payment” that is “not linked to any other terms or conditions.”

The additional language stating that the one-time payment is not linked to any other terms or conditions came after the union, which represents 5,400 pilots, said it would not accept a deal if the salary increases are offset by savings elsewhere.

The union, Vereinigung Cockpit, asked pilots of short-haul flights to walkout Tuesday and pilots of long-haul flights to walkout Wednesday. Lufthansa cancelled thousands of flights last week and this week after the pilots initiated the strike Nov. 16.

The two sides are locked in an increasingly bitter dispute over employment terms. The union demanded a 3.7 percent pay increase, backdated to 2012, when the previous wage agreement expired. The total pay increase under the union’s demand would be close to 20 percent. (RELATED: Lufthansa Pilot’s Union Warns Of Strike After Negotiations Fail)

Lufthansa, fighting to remain competitive against low-cost alternatives and expanding Gulf-state airlines, has asserted it can’t meet the union’s demands. “We stand no chance to survive” if the company gives in to the union’s request of a 20 percent raise, Carsten Spohr, the airline’s CEO, said Nov. 24. (RELATED: A Fight For Survival: Flagship Airline Refuses To Bow To Union Demands)

Lufthansa’s new offer amounts to slightly more than its previous offer of a 4.4 percent (up from a previous offer of 2.5 percent) raise.  It is unclear how much more the new one-time payment would be worth, as a previous offer rejected by the union included a one-time payment worth 1.8 months’ salary.

The airline asked pilots to switch from a defined benefit to a defined contribution pension plan, something the union immediately rejected.

Spohr contests that the airline simply cannot pay the 20 percent increase to pilots, and warned that the airline’s future is at risk if it does not cut costs to compete with the likes of Ryanair, a successful low-cost carrier that is expanding into Germany.

An increased supply of affordable seating due to cheap oil, combined with recent high-profile terrorist attacks in Europe, have created challenges for Europe’s legacy carriers.

Labor unrest is nothing new to Europe’s largest carrier by revenue. The current strike is Lufthansa’s fourteenth since 2014.

“We want to get back to the negotiating table as quickly as possible,” Lufthansa board member Bettina Volkens said in a statement, according to Reuters.

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