* Lufthansa considers deal with Swiss PrivateAir - Spiegel
* Deal would be for 14 A340s for long-haul budget service
* Move comes after talks with union on overtime rules fail
* Lufthansa: Leasing would comply with labour agreements
* Union says management demands are excessive (Adds Lufthansa comment, union comment, background)
FRANKFURT, Sept 28 (Reuters) - German carrier Lufthansa may hire a third party to operate 14 A340 aircraft it plans to reconfigure for long-haul budget flights to get around the need for pilots’ approval of its no-frills expansion, a German magazine reported.
Weekly Der Spiegel said on Sunday that Lufthansa Chief Executive Carsten Spohr was considering renting out the A340s earmarked for long-haul low-cost services to Switzerland-based PrivateAir and leasing them back with Swiss pilots who are not subject to its German labour agreements.
European airlines like Lufthansa and Air France are seeking to expand low-cost services as they struggle to compete with budget carriers Ryanair and easyJet, but they face opposition from powerful labour unions.
Lufthansa pilots are threatening a fifth strike so far this year in a row over an early retirement scheme.
Lufthansa has also been seeking concessions from workers to limit the operating cost of its project “Jump”, which plans 14 A340s flying to tourist destinations like Las Vegas or Mauritius from November 2015.
This week, it said it would seek alternative management of the aircraft in an unprecedented move after failing to reach an agreement with labour union Vereinigung Cockpit (VC) that would have required the planes’ pilots to work longer hours before receiving overtime benefits.
“We are entirely within our rights under existing labour agreements,” a spokeswoman for Lufthansa said on Sunday but declined to further comment on the Spiegel report.
Joerg Handwerg, a board member of VC, said management’s demands were excessive and overburdened workers. “We really feel like management is not planning a future that includes us pilots,” he said.
$1 = 0.7885 euro Reporting by Maria Sheahan, editing by William Hardy