Strikes and collective bargaining: Lufthansa does not reach heights – forecast conceded

Strikes and collective bargaining
Lufthansa does not reach heights – forecast conceded

April 15, 2024, 6:35 p.m

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Ground staff and cabin crew have been on strike at Lufthansa in recent months. In addition, there are strikes at the airports. Thousands of flights are canceled. Hundreds of thousands must be compensated. As a result, the airline is abandoning its annual plans and cutting its forecast.

Germany’s largest airline cannot maintain the planned altitude in view of its annual targets. The concentration of strikes within the company and at airports is costing Lufthansa around half a billion euros in profit this year. In addition to the direct costs of massive flight cancellations, booking demand was also dampened after tariff conflicts were resolved, the DAX company explained. Lufthansa therefore lowered its forecast for the adjusted operating result to 2.2 billion euros, after originally targeting the previous year’s level of almost 2.7 billion euros. On the stock market, shares fell by almost four and a half percent.

In addition, the range of flights will not be expanded as quickly as planned because new aircraft are a long time coming. Punctuality also needs to be improved, it said. The outlook is also uncertain due to the unforeseeable consequences of the recent escalation of the Middle East conflict, which is also leading to flight cancellations.

Lufthansa recently settled the collective bargaining dispute with the Verdi union over higher wages for ground staff and with the UFO cabin union for flight attendants. Verdi alone caused five days of strikes, and UFO paralyzed air traffic for one day. This leads to around 1,000 flight cancellations every day, affecting around 100,000 passengers who have to be rebooked and compensated. The strikes by security staff at airports also forced aircraft onto the ground in February and March until Verdi and the employers’ association BDLS reached an agreement via arbitration.

Summer bookings so far as expected

In the first quarter, the strikes had a negative impact on earnings of around 350 million euros, Lufthansa said. There will therefore be an operational loss of 849 million euros, following a loss of 273 million euros in the same period of the previous year. According to the forecast published by the company, analysts expected a deficit of 554 million euros in the seasonally deficit first quarter. The quarterly balance sheet will be published on April 30th.

But Lufthansa is still calculating strike costs of around 100 million euros in the second quarter. In addition to lower short-term bookings, this is due to the ongoing conflict at the Austrian subsidiary Austrian Airlines.

However, bookings for the summer correspond to positive expectations, Lufthansa explained, which will ensure profit growth in the second half of the year. In March, Lufthansa boss Carsten Spohr had already given up the goal of generating a return on sales of eight percent this year. Higher personnel costs with clearly single-digit increases per year thwart the plan. In doing so, the airline bought itself longer peace on the strike front, because the collective agreements have terms of two to three years.