Today, Lufthansa (OTCQX:DLAKF), a German airline, canceled nearly 800 flights after the pilots’ union declared a strike over the rejection of a pay increase.
Deutsche Lufthansa AG
Due to the strike called by the pilots, Deutsche Lufthansa AG (OTCQX:DLAKF) had to cancel 800 flights on Friday. The German airline canceled nearly all of the flights to and from Frankfurt and Munich.
After salary negotiations once again deadlocked, the labor organization Vereinigung Cockpit called for more than 5,000 Lufthansa pilots to hold a 24-hour walkout. The union is requesting a 5.5% salary increase for pilots this year as well as future automatic inflation adjustments. The discussions also include better terms for new pilots.
The company’s statement regarding the negotiations said that the management had offered a very good and socially balanced offer, despite the Covid crisis’ ongoing burdens and the uncertain outlook for the global economy.
CFO Remco Steenbergen noted during Lufthansa’s most recent earnings conference call that a one-day strike cost the airline between €30 million and €35 million. Shares of the company climbed 3.29% on Friday after three weeks of selling pressure.
Vereinigung Cockpit (VC), the pilots’ organization, has requested a 5.5 percent hike this year and an automatic boost over inflation in 2023.
In addition, the airline said that the new pay and holiday structure requested by the pilots would push up employment expenses by 40%, or $900 million over two years.
According to the company, the union representatives’ proposed package would result in a 40% (or over $895 million) increase in the cost of hiring pilots. Given the suddenness of the strike, it is safe to say that airline executives have bluntly rejected this.
Last week, the company revealed plans to reduce an unknown number of flights from October 2022 to March 2023, primarily affecting travelers departing from its base at Frankfurt Airport (FRA). The airline claimed that these measures are being taken in order to “provide passengers with a reliable and predictable flight schedule.” The main cause of the cuts, according to the carrier, is understaffing (internally and at the airport).
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