Pilots charge Lufthansa with scope violations

 - March 31, 2010, 6:40 AM

Lufthansa pilots continued negotiations with airline management at press time over what they claim amount to scope-clause violations by the German flag carrier. The pilots, organized in a trade union called Vereinigung Cockpit (VC), started a four-day strike on February 22 for higher pay, better work time arrangements and–above all–job security. However, a court curtailed the action on its first day, deeming its goals disproportionate and illegal, and ordered the pilots back to work until at least March 8.

The pilots suspect that Lufthansa intends to outsource intra-European flights to subsidiaries and lower-cost partner airlines, including regionals, making a number of mainline crews redundant. To prevent that move, they tried forcing the airline
to offer pilots of all its subsidiaries and associate companies the same working conditions and pay as mainline crews. Lufthansa pilots had obtained job guarantees in the 1990s, when the flag carrier enjoyed a near monopoly on scheduled services
in Germany and was not the multi-airline conglomerate it is today.

In its verdict, the court ruled that the VC union could not make demands for staff of subsidiaries or partner airlines it does not represent, especially those based outside Germany. Negotiations continued during the two-week suspension, and Lufthansa announced in a preliminary statement a loss of ?112 million ($150 million) for last year, as well as a sales decrease of 10 percent, to ?22.5 billion ($31 billion). The results, claims the airline, support its position that a pay increase would prove impossible.

Pilots did not resume their strike at the close of the court-ordered suspension and discussions continued at press time. Lufthansa faces stiff competition on its intra-European lines from low-cost carriers, while the flag carrier’s flight crews remain among Europe’s highest paid; senior captains of large aircraft reportedly earn up to ?200,000 ($280,000) per year. Lufthansa’s foreign subsidiaries, including Swiss, Austrian Airlines, Lufthansa Italia, Brussels Airlines and British Midland, as well as its low-cost domestic subsidiary Germanwings, all operate under distinctly lower cost structures than does the parent airline.

Lufthansa’s regional business unit includes five regional airlines–Lufthansa City Line, Air Dolomiti, Augsburg Airways, Contact Air and Eurowings.

All operate flights designated with Lufthansa code numbers on behalf of the parent company under wet-lease agreements. The structure leaves Lufthansa the option to transfer flights to regional partners when it does not require large aircraft from the mainline to serve a particular route.

Lufthansa does not publish separate traffic figures for its regional system, but growing fleets indicate increasing traffic. The five regional associates operate aircraft as large as the Embraer E195 configured with 116 seats (five in service) and hold orders for 15 more. Lufthansa’s own larger Boeing 737-300s hold only
a few more passengers, providing 127 seats. Meanwhile, Swiss European Air Lines, the regional arm of Lufthansa subsidiary Swiss International, holds a firm order for 30 Bombardier C Series, which will also hold more than 100 seats. Lufthansa can also shift flights between European destinations and its German hubs to subsidiaries such as Swiss European or Air Dolomiti. The five regional partners and Swiss European operate a fleet of 247 aircraft within the group’s total fleet of 722 airliners.

Lufthansa can ill afford another strike, and pilots know that the airline cannot maintain loss-making structures in the long run. The parties had not announced an agreement as of press time, but the ongoing discussions pointed to a probable deal in the coming weeks.