January 21, 2015 / 11:20 AM / 5 years ago

Lufthansa's Eurowings agrees new pay deal with pilots

FRANKFURT (Reuters) - Lufthansa’s (LHAG.DE) regional carrier Eurowings has agreed a five-year wage deal with its 300 pilots, it said on Wednesday, clearing a further hurdle as it seeks to settle industrial disputes with other pilots in the group.

Planes of German flagship carrier Lufthansa are parked on tarmac at Munich's airport, December 1, 2014. REUTERS/Michael Dalder

Lufthansa is in dispute with employees on several fronts as it tries to cut costs to compete with budget airlines such as Ryanair (RYA.I) and easyJet (EZJ.L) as well as with Gulf carriers such as Emirates.

The German group said on Wednesday it had now secured pay deals at Eurowings, Swiss International Air Lines, Austrian Airlines and Lufthansa CityLine.

But disputes continue with about half its pilots, at Lufthansa German Airlines, Lufthansa Cargo and Germanwings.

They staged 10 separate strikes last year, costing the airline close to 200 million euros ($232 million) in lost operating profits last year, and have threatened further walkouts in the coming weeks.

The row centres on an early retirement scheme and on Lufthansa’s plans to expand its low-cost operations with Eurowings, where costs are 40 percent below that of Lufthansa-branded operations.

The pilots oppose the plan because Eurowings is not subject to the same collective labour agreements as pilots at the Lufthansa and Germanwings brands.

“Lufthansa is always prepared to cooperate on a viable solution for all sides,” the airline said in its statement on Wednesday.

It said the new agreement with Eurowings, effective Jan. 1, included a pay increase of 2.5 percent for this year and of at least 2 percent for subsequent years, depending on the rate of inflation.

($1=0.8642 euros)

Reporting by Georgina Prodhan and Maria Sheahan; Editing by Greg Mahlich

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