At the end of last week there was good news for Lufthansa pilots after a long time. Despite the enormous slump in air traffic caused by the corona pandemic, the airline took the threat of firing pilots off the table. Because more than expected had opted for voluntary severance payments. In addition, the bookings for the summer are developing more positively than expected, from May the crews on short-haul routes are even regularly threatened with overtime again, according to internal reports.
But there’s a good chance that that was the only good news for a while. Because according to SZ information, the group is seriously considering founding a new airline that would benefit from significantly lower personnel costs. Like the current one, this airline would fly under the Lufthansa brand and serve domestic German and European routes from Frankfurt and Munich. The negotiating committees of Lufthansa and the Vereinigung Cockpit pilots’ union are meeting this week to find a compromise. But the demands of the airline are reportedly high: the pilots of the core brand should fly 20 to 30 percent cheaper in the future in order to prevent the re-establishment. The group does not comment on the plans when asked.
Lufthansa pilots are among the best-paid crews, and their working conditions are also comparatively comfortable. This has been an ever-increasing disadvantage for many years, especially on short and medium-haul routes. Because the rapidly growing low-cost airlines can plan with significantly lower personnel costs and establish themselves on routes on which Lufthansa no longer earns any money. Lufthansa has therefore outsourced the so-called decentralized traffic – i.e. all routes that do not touch the two hubs in Frankfurt and Munich – to the subsidiary Eurowings for a long time.
Although Eurowings does not come close to the costs of the very cheapest airlines such as Ryanair and Wizzair, Eurowings is now comparing itself with EasyJet. In addition, the Lufthansa brand has increasingly receded into the background outside of its main stations and feeder services. This also happened because the so-called group collective agreement, which was in force until 2018, expressly excluded that flights under the Lufthansa brand be operated by pilots who are employed elsewhere – for example at Eurowings.
The agreement was signed in 2004, but Sun Express was formed much later
In the meantime, however, a lot has happened: In October 2016, the Cologne Regional Labor Court ruled in a case involving the then subsidiary Sun Express Germany that provisions from the group collective agreement only apply to airlines that already existed at the time of the agreement. The agreement was signed in 2004, but Sun Express was formed much later. Lufthansa argued that a new airline in the group could therefore fly indefinitely under the Lufthansa brand. There would be no difference for the passengers, but the difference would be significant in terms of costs.
In 2018, the company and the union replaced the collective agreement with the so-called perspective agreement, which guaranteed pilots a fleet of at least 325 aircraft and Lufthansa 15 percent lower costs in the cockpit. But at the end of 2021, the airline terminated the agreement because it would no longer reach the number of machines due to the Corona crisis. After a transition phase, the collective bargaining framework thus falls back to the old group collective agreement, but now without the highly restrictive third-party management clause and, according to Lufthansa, also without the obligation to give up the 15 percent lower cost level.
The judgment of 2016 now unexpectedly gives Lufthansa leverage – and it is reported that this time it is ready to use it. However, there are also voices internally that want to push through lower costs, but ultimately do not want to found a new airline. Because it can easily take a year to get a new so-called Air Operator Certificate (AOC), i.e. the approval. In addition, a new subsidiary would make the already complex group even more confusing.
Not all questions have been clarified on the pilot side either: So far, the waiver of layoffs only applies to the core Lufthansa brand. It is unclear what will happen to most of the almost 400 former Germanwings employees who are looking for a new job after their flight operations have ended in 2020. 80 of them will be able to fly for Lufthansa in Munich in the future. Lufthansa says they are looking for perspectives in another existing “or new flight operation”.