Lufthansa threatened with strikes as union rejects wage offer

FRANKFURT Wed Apr 17, 2013 6:48pm BST

The Logo of German air carrier Lufthansa is pictured next to a departure board during a five-hour warning strike, following a pay dispute, represented by German united services union Ver.di at the Fraport airport in Frankfurt March 21, 2013. REUTERS/Lisi Niesner

The Logo of German air carrier Lufthansa is pictured next to a departure board during a five-hour warning strike, following a pay dispute, represented by German united services union Ver.di at the Fraport airport in Frankfurt March 21, 2013.

Credit: Reuters/Lisi Niesner

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FRANKFURT (Reuters) - Deutsche Lufthansa (LHAG.DE) was threatened with a second round of strikes as labour union Verdi, representing thousands of staff at the airline, rejected as "unacceptable" an offer for wage increases from the company.

Lufthansa offered to raise salaries by 1.2 percent from October this year and a further 0.5 percent a year later, in a deal that would run for 29 months and would not contain job guarantees, a spokeswoman for Verdi said on Wednesday.

"We will discuss the offer tomorrow and possibly decide ... if we're going on strike again," she said, noting passengers would be informed in due course if the union was calling further stoppages.

Lufthansa said it had offered to raise salaries in two steps in a deal that would last from February this year to June 2015, giving total increases of between 1.7 percent and 2.3 percent depending on the division an employee worked in, said a spokeswoman, declining to give more details.

Staff have already held a one-day strike on March 21, forcing Lufthansa to cancel nearly 40 percent of its flights for the day.

Efforts by big European airlines such as Lufthansa and Air France-KLM (AIRF.PA) to cut costs - in the face of soaring jet fuel prices and fierce competition from Middle Eastern airlines and low-cost carriers - have fanned tensions with workers.

Verdi is demanding a 5.2 percent pay rise for 33,000 cabin crew and ground staff at Lufthansa Cargo, Lufthansa Technik, Lufthansa Systems, catering unit LSG Sky Chefs and ground crews. It also wants a commitment by Lufthansa to safeguard jobs.

Lufthansa, Europe's biggest airline by revenue, wants to freeze pay and get staff to work an hour more each week to help it remain competitive.

The airline is cutting 3,500 jobs, revamping low-cost carrier Germanwings and bundling procurement for its airlines as it seeks to cut costs and improve earnings.

Last year it agreed to a mediated deal to raise cabin crew pay almost 4 percent, adding 33 million euros to costs, after a series of strikes forced it to cancel more than 1,000 flights.

Staff costs accounted for just over a fifth of its overall operating expenses last year. That compares with a 30 percent share at Air France, but budget carriers such as Ryanair (RYA.I) and easyJet (EZJ.L) have a much lower cost base.

The comparable figure for the latter two is closer to 10 percent, allowing them to undercut "legacy" or longer-established carriers on fares.

(Editing by David Holmes)

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