Lufthansa pilots threaten to extend stoppage as dispute intensifies

By Features Reuters

Pilots at Lufthansa threatened on Friday to extend their latest strike in a long-running pay dispute with the German airline, raising pressure on management and leaving passengers fearing fresh disruption.

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The walkout - the 14th since early 2014 - began on Wednesday and has already grounded some 2,600 planes and affected more than 315,000 passengers. Lufthansa has said the disruption has started to hit medium-term bookings.

The airline said it would cancel a further 137 flights on Saturday, around 5 percent of its schedule, including 88 intercontinental flights. Some short- and medium-haul flights would also be affected, it said.

Lufthansa urged the union to enter arbitration but the union said it wants to see a better offer first.

"As things stand at present, we will have to keep striking as there is no basis for negotiations or arbitration with Lufthansa at the moment," said Joerg Handwerg, board member at the Vereinigung Cockpit (VC) pilots' union.

The union wants an average annual pay increase of 3.7 percent for 5,400 pilots in Germany over a five-year period from 2012. Lufthansa has offered 2.5 percent over six years to 2019.

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Lufthansa Chief Executive Carsten Spohr has said the carrier's future would be on the line if pilots' wages were raised to the level demanded.

Lufthansa says it has to cut costs to compete with leaner rivals such as Ryanair on short-haul routes and Emirates on long-haul flights, despite making a record profit in 2015.

Lufthansa pilots are well paid by industry standards. A pilot at Lufthansa earns on average 180,000 euros ($190,000) a year before tax, though a captain on the highest pay level can earn as much as 22,000 euros a month before tax.

LONG-TERM DAMAGE?

Passengers at Frankfurt airport on Friday were running out of patience.

"It's not pleasant," said Lufthansa passenger Dieter Eidt who was booked on a flight to Rome and faced a lengthy delay.

"I believe that they are demanding something that can't be fulfilled and which is unjustified," Eidt said of the pilots.

Senior conservative lawmaker Michael Fuchs has called for forced mediation to end the dispute.

"It can't be that hundreds of thousands are taken hostage for the interest of a small majority," he said, adding the walkout risked damaging German business.

The economy ministry said it was up to management and the union to find a solution.

Shares in Lufthansa, down more than 13 percent this year, traded 0.6 percent lower on Friday as investors fretted over the prospect of stoppages dragging on.

Ruxandra Haradau-Doeser, an aviation analyst at Kepler Chevreux, said Lufthansa's profit target of 1.8 billion euros ($1.9 billion) for 2016 could be at risk if the strike lasts throughout the whole of next week.

However, she added that investors expected Spohr to stand firm. "Investors trusted him on this. He is in a difficult position. If he were to yield, in my opinion he would lose the trust of investors and the market," she said.

Pilot strikes in 2014 cost Lufthansa 222 million euros, roughly 21 million euros per day, according to the IW Cologne Institute for Economic Research. In 2015, walkouts by pilots and cabin crew cost it 231 million euros, around 30 million per day.

The airline has since agreed deals with the main unions representing ground staff and cabin crew in Germany.

(Additional reporting by Reuters TV in Frankfurt and Sabine Siebold in Berlin; Editing by Keith Weir)