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Lufthansa Set to Slash 22,000 Jobs Amid Coronavirus Outbreak
Lufthansa plans to cut thousands of jobs in response to the financial turmoil caused by the coronavirus pandemic. Despite the airline agreeing on a €9 billion ($9.8 billion) bailout package with the government, 22,000 jobs are at stake as the company announced on Wednesday after a bargaining summit with the unions: Cockpit, UFO and Verdi.
Not only the pilots and the cabin crew, but also the ground staff and executive team will be affected by the imminent layoffs. According to Lufthansa, half of the surplus jobs are in Germany. The subsidiaries Swiss International Airlines, Austrian Airlines and Brussels Airlines will also impose thousands of jobs cuts. According to media reports, Swiss will likely ax 1,900 jobs whereas Austrian and Brussels each want to cut around 1,000 jobs.
COVID-19 hit the German flag carrier and its subsidiaries hard, forcing the aviation group to ground almost all aircraft in its fleet. Before the rescue package agreement, CEO Carsten Spohr said that Lufthansa was losing €1 million euros ($1.1 million) per hour, adding that the battered airline giant would need state aid to survive.
Travel restrictions and lockdowns due to the coronavirus pandemic brought Lufthansa operations to a standstill with the exception of cargo-only flights. Although the bailout has been approved by the state, the European Commission and shareholders still have to give the green light for it at the extraordinary general meeting on June 25.
“Without a significant reduction in personnel costs during the crisis, we will miss the chance of a better restart from the crisis and risk that the Lufthansa Group will emerge from the crisis significantly weaker,” said Human Resources Director Michael Niggemann.
Lufthansa Group expects that the recovery in air travel demand will be slow. In the post-corona period, the group calculates that there will be approximately 100 fewer aircraft in its fleet. “The recovery in demand in the air transport sector will be slow in the foreseeable future,” said the airline.
The cabin crew union UFO emphasized that it wasn’t ready to reach a solution until the extraordinary general meeting on June 25.
“The employees of all airlines in the group must be protected against dismissal and we believe that the management is finally going on a common course,” stated the union. According to the UFO, the calculated surplus employee corresponds to 26,000. It was previously estimated that there were 10,000 employees the group no longer needed.
“It is good that we have exchanged ideas so intensively today. However, it seems that a joint effort is still a long way off,” said UFO Chairman Daniel Flohr. So far, UFO has offered a zero-percent increase in wages for this year and the reduction of the hourly surcharge for, particularly long flights.
The pilot union COCKPIT reiterated its willingness to make concessions of €350 million, meaning that pilots will voluntarily forego up to 45% of their salary in order to protect their jobs. “In return, we expect only the Group Executive Board to be committed to its employees,” said President Markus Wahl. COCKPIT states that job outsourcing with poorer terms would be totally unacceptable.
“The talks at today’s collective bargaining summit have shown that we want to and will find a solution together,” said the head of the pilot union.
Lufthansa said that a short-time working scheme backed by the government and agreements to raise capital should avoid layoffs as far as possible. However, the company demands wage cuts, cutbacks in vacation and Christmas bonuses and a waiver of salary increases.
“Of course we are aware of the difficult financial situation, but we also expect substantial reorganization concepts beyond just saving staff,” said Verdi Vice President Christine Behle. An agreement will not be possible without securing employment.
Meanwhile, the group resumed flights, aiming to serve 90% of short and medium-haul and 70% of long-haul destinations by September. German flag carrier Lufthansa alone will be flying more than 100 times a week to destinations in North America via its hubs in Frankfurt and Munich in the fall.
Lufthansa Group logged €2.1 billion euros net loss in the first quarter of the fiscal year and its revenue decreased by 18% (from €7.84 billion to €6.44 billion) compared to the same period last year. The company, the second-largest aviation group in Europe, employs around 138,000 people.
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