Lufthansa agrees to $562 mn cost-cutting deal with flight attendants for job security

Lufthansa announced a cost-cutting deal with German flight attendants’ union (UFO) on June 25  to deal with the economic effects of the coronavirus pandemic. Germany’s flag carrier said in a statement that they have agreed on a package worth more than half a billion euros ($562 million) to deal with the economic effects of the crisis.

The series of measures include suspension of compensation hike, reduction in flight hours with a corresponding reduction in compensation, and temporarily reduced contributions to pensions. Both parties also agreed on a series of voluntary measures and severance programs which include unpaid leave and a further reduction in working hours. 

Michael Niggemann, Board Member for Human Resources and Legal Affairs at Deutsche Lufthansa AG, said in a statement that the deal is an important signal to employees, shareholders and tomorrow's general meeting. Niggemann added that the company also see the deal as a regained and constructive social partnership with the UFO.

In a separate statement, UFO said that the union is pleased for all the employees of Lufthansa but highlighted that the agreement alone does not solve “the crisis”. The union announced that both parties have agreed to four-year protection against dismissal, for everyone working in Lufthansa cabin.

The union said that though the package includes savings that largely generated from voluntary measures and other clearly defined cuts, they are convinced of sending a positive social partnership signal to the shareholders. The union is still to publish final editorial agreements and UFO members still have to agree to the package through a ballot. 

Read: Lufthansa Reports €1.2 Billion Quarterly Loss Due To Coronavirus Pandemic

Huge bailout package

Meanwhile, the European Commission has approved German plans to contribute €6 billion to the recapitalisation of Lufthansa. Executive Vice-President Margrethe Vestager, in charge of competition policy, said in a statement that Germany will contribute €6 billion to Lufthansa's recapitalisation, together with a €3 billion state guarantee on a loan. 

“This substantial amount of aid will help Lufthansa weather the current coronavirus crisis, which has hit the airline sector particularly hard. But it comes with strings attached, including to ensure the State is sufficiently remunerated, and further measures to limit distortions of competition,” added Vestager.

Read: Lufthansa Group Extends Free Rebooking Period Due To ‘exceptional Circumstances’