Lufthansa Cancels Flights as Pilot Strike Begins
November 23 2016 - 5:30AM
Dow Jones News
Deutsche Lufthansa AG pilots Wednesday began a two-day strike
that is grounding more than a quarter of its flights on the first
day and poses the latest threat to the German flag carrier's growth
outlook.
The airline said it would suspend 876 of its 3,000 scheduled
flights Wednesday, affecting about 100,000 passengers. Fifty-one of
the airline's intercontinental flights will be canceled, including
at least seven U.S.-bound flights one day ahead of the busy
Thanksgiving holiday.
The labor action is related to a protracted dispute with pilots
over employment terms. Lufthansa has been trying to cut costs by
shifting pilots to its lower-cost budget unions, which pilots
oppose. Another key point of contention is early retirement
packages for pilots.
The union representing 5,400 Lufthansa pilots late Tuesday said
it would extend the walkout through Thursday, threatening about as
many connections.
The strike is a further profit headwind for Lufthansa, which
this year has had to contend with weaker ticket prices because of a
glut of seats for sale. Terrorist attacks in Europe also weakened
demand, particularly on lucrative Asian routes. The airline, which
began the year hoping for earnings growth, has since moderated its
expectation to adjusted earnings before interest and taxes roughly
on par with last year's €1.8 billion ($1.9 billion).
The German carrier faces stiff competition in Europe from
lower-cost rivals such as Ryanair Holdings PLC, Europe's largest
airline by passengers carried. Ryanair is expanding heavily in
Germany and this month announced it would set up a base at
Frankfurt Airport, Lufthansa's principal hub. Lufthansa's long-haul
business is also under pressure from rivals with lower labor
costs.
Wednesday's strike is the latest to affect Lufthansa. In
November last year, roughly 4,700 of the carrier's flights were
canceled in a one-week strike amid a similar dispute with cabin
crew union UFO. The two sides have since settled their dispute,
although cabin crew at Lufthansa's discount units remain at odds
with management.
Flights operated by Lufthansa subsidiaries Eurowings,
Germanwings, Air Dolomiti, Austrian Airlines, Swiss and Brussels
Airlines won't be affected by this week's strike, the German
company said. Austrian and Swiss airlines are currently reviewing
options to add German flights to their normal schedule.
The pilots union, Vereinigung Cockpit, called for a 24-hour
strike Wednesday to enhance pressure in the dispute. Lufthansa
asked a German labor court to issue a temporary injunction against
the strike, but the court denied the motion Tuesday. Lufthansa's
appeal of the verdict failed.
Friedrich Geiger contributed to this article.
Write to Robert Wall at robert.wall@wsj.com and Ulrike Dauer at
ulrike.dauer@wsj.com
(END) Dow Jones Newswires
November 23, 2016 05:15 ET (10:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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