Back in March, we learnt that Lufthansa had reached a tentative deal with the labour who represent cockpit crew, Vereinigung Cockpit (VC) over a long-running and often bitter dispute over planned changes to pilot pay and conditions. Finally, it looks like both sides have hammered out the details of that deal with what Lufthansa is calling a “comprehensive package”.
The dispute came to a head last November when hundreds of Lufthansa flight crew walked out on a 48-hour strike. Around 1,700 flights were cancelled, impacting the travel plans of nearly 180,000 passengers. It was the 14th such strike by pilots at the German carrier since 2014.
The two-sides had locked horns over a proposed reduction in pension benefits and wages that Vereinigung Cockpit said lagged behind competitors. The union had called for a retroactive pay raise to make up for what it saw as low pay at Lufthansa.
For its part, Lufthansa said the changes were necessary for the future viability of the business – especially in light of intense competition from rivals who didn’t pay their pilots so much. The problem was particularly acute on short-haul routes dominated by low-cost airlines.
“With the collective bargaining agreement, we have created a foundation for a new social partnership with the VC,” explained Bettina Volkens who heads Lufthansa’s Human Resources department.
She continued: “This compromise opens up career prospects for our pilots and makes an important contribution to the competitiveness of our company.”
The agreement includes a new pay deal, changes to the pilot’s pension policy and transitional payments. Lufthansa estimates the deal will see a 15% saving in cockpit staff costs. The union is set to present the deal to pilots who will take part in a ballot at some point in December.
If the pilots give it the green light, the deal should stabilise relations between the two sides until at least 2022.
Some of the biggest changes include:
Lufthansa will change the existing pension scheme to one of defined contributions which should save the airline hundreds of millions of Euros. The airline points out that the pension scheme will bring its pilots in line with ground staff and cabin crew who transitioned to a similar pension several years ago.
The retirement age will also be gradually increased – by 2021, the pensionable age for pilots will be 60 years old. Again, Lufthansa says this isn’t without precedent – pilots at Lufthansa Cargo and the low-cost subsidiary, Germanwings already work to this retirement age.
Pilots will see a staggered pay increase which totals 10.3%. In keeping with the union’s demand for a retroactive pay raise, Lufthansa will also make a one-off payment of up to 1.8 of a pilots monthly salary for a period dating from May 2012 to June 2022.
As part of the agreement, Lufthansa will be able to recruit 700 junior pilots on new contracts. The airline says the deal will allow the creation of around 600 additional captain positions in the next few years.
In a statement, the union said the package “is a step towards a new tariff partnership,” and highlighted the fact that “favourable cost structures, especially in the short-haul segment, continue to improve Lufthansa’s market position.”
The union also said it was pleased the deal would now mean junior pilots could secure permanent jobs at Lufthansa and its subsidiary, Germanwings.