Germany’s Lufthansa and its pilots say they have settled a pay dispute through arbitration

Lufthansa and its pilots settle pay dispute

BERLIN — Germany’s Lufthansa and its pilots have settled a bitter pay dispute through arbitration, fending off the prospect of further strikes, the airline and the pilot union said on Thursday.

Lufthansa agreed to guarantee job security and pilots accepted a salary freeze until March 2011, Cockpit union spokesman Joerg Handwerg told The Associated Press.

“We agreed on the salary freeze to ensure Lufthansa’s future competitiveness,” he said. The union members still have to formally approve the agreement, which represents “a fair compromise,” Handwerg added.

A spokeswoman for Deutsche Lufthansa AG, Claudia Lange, told the AP that the airline accepted the outcome of the arbitration started in April by Klaus von Dohnanyi, an 82-year-old former mayor of Hamburg. She declined to elaborate on the details of the agreement.

Lufthansa, Europe’s biggest airline by sales, and Cockpit had been locked in a bitter dispute over pay and job security since early this year. That led to a first round of walkouts in February by the 4,000 pilots represented by Cockpit.

For Lufthansa’s pilots one major concern was that the company would start hiring new staff under different contracts and move more of its planes to its foreign subsidiaries in a bid to migrate jobs to neighboring countries with cheaper conditions.

Lufthansa has made the union major concessions in this regard, Handwerg said. The agreement makes sure Lufthansa can’t arbitrarily move jobs, he said.

Cologne-based Lufthansa owns or holds significant stakes in airlines including Swiss International Airlines, Austrian Airlines, JetBlue of the U.S., and Britain’s BMI.

Lufthansa in May reported an increased group revenue of €5.8 billion ($7.1 billion) for the first quarter, even though it had a net loss of €298 million, as the carrier faced the financial burden of the pilot strike, higher fuel costs and expenses from consolidating stakes in other airlines.

The airline still hopes to achieve a positive operating result for the full year, but has not yet specified what the financial burden of the disruptions caused by the Icelandic volcano — which grounded planes across Europe earlier this year — will be.

The last major dispute with its pilots rocked Lufthansa in 2001. It was also was settled through arbitration.

Thursday’s announcement came after the closing of Germany’s stock market. During the day, Lufthansa’s shares fell 2 percent to €11.80.

Online:

www.lufthansa.com