Lufthansa's board meets on Wednesday to approve expansion of its budget flights against the backdrop of deteriorating relations with pilots, who are now planning their tenth strike this year.
Lufthansa's board meets on Wednesday to approve expansion of its budget flights against the backdrop of deteriorating relations with pilots who are now planning their tenth strike this year.
With the dust barely settled after this week's two-day walkout that forced Lufthansa to cancel half its flights, affecting 150,000 passengers, pilots' union Vereinigung Cockpit called another strike for Thursday.
"That the pilots have already announced the next strike while one is still ongoing is completely incomprehensible" - A team Lufthansa statement.
However, this year's 160 million euro ($198 million) hit, to operating profit as a direct result of the dispute over proposed changes to an early retirement scheme, is only the tip of the Lufthansa iceberg and highlights the difficulty facing traditional airlines' aiming to cut costs, to counter the threat to their surivival from leaner rivals.
Lufthansa is battling to remain competitive in the face of the relentless march of budget carriers such as Ryanair and easyJet, and Gulf operators including Emirates, Etihad and Qatar on lucrative long-haul routes.
Also Read: Malaysia Airlines apologises for insensitive promotional tweet after criticism
Hence the company's determination to push ahead with expansion of regional airline Eurowings into a no-frills platform alongside its existing budget carrier Germanwings. It is also planning a separate low-cost brand for long-haul flights.
Lufthansa, which traditionally targets mainly business customers, wants to chase faster market growth by boosting low-cost services to price-sensitive tourists, with Chief Executive Carsten Spohr, vowing to remain strong despite pilot resistance.
Like their peers at Air France, the pilots believe the plans could result in lower pay and worse conditions.
LONG-TERM FIX
"We have done this for the sake of the long-term future of the company. Lufthansa cannot remain competitive with structures established decades ago," Spohr said at the company's third-quarter results in October.
The company has reached an deal with cabin crew on cutting costs on some Lufthansa-branded flights to tourist destinations, but not with the pilots covered by a collective labour agreement at Lufthansa and Germanwings.
Spohr has said this will not 'hold back' Lufthansa, adding that it could seek pilots from elsewhere within the Group, which also includes Austrian Airlines and Swiss.
Funny read: Turkish Airlines' hostess fired for being 'too raunchy'
However, labour representatives are likely to back the plans for a new low-cost, long-haul brand at Wednesday's board meeting, a source familiar with the talks told Reuters.
Thursday's strike will affect both long-haul and cargo flights, and Lufthansa said it is 'working at top speed' to revise flight plans.
Lufthansa has managed so far to keep the strike costs under control, but the latest walkouts could threaten its 2014 profit target. After the eighth walkout of the year in October, finance chief Simone Menne said the full-year target for operating profit of 1 billion euros could be at risk if further strikes occurred before the end of the year.
The airline giants' shares are down 8 percent this year, against a 14.5 percent gain by European travel and leisure stocks.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Lufthansa-logo"){kind=logo}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}