09/04/2012 10:26 AM

Strikes Across Germany

Fronts Harden in Lufthansa Labor Dispute

By and

Lufthansa flight attendants held strikes at three major German airports on Tuesday to protest against cost-cutting measures, resulting in the cancellation of over 300 flights. But the industrial action may be just getting started. Labor disputes with pilots and ground crews could follow.

For decades, there has been one cast iron rule at Germany's biggest corporations: The head of the supervisory board never interferes with the work of the executive board. But there is one exception to this maxim -- when the company is in extreme crisis.

National carrier Lufthansa doesn't seem to be in a good place right now. After all, why else would Jürgen Weber, the head of the supervisory board, have kicked up such a fuss in a recent interview in weekly newspaper Die Zeit? "It's better to have a big confrontation now rather than waiting until the company has catapulted itself out of the competition," Weber told Lufthansa CEO Christoph Franz and Carsten Spohr, the board member responsible for Lufthansa's passenger airline business. Both have been locked in a hefty dispute with UFO, the union that represents the majority of the almost 18,000 flight attendants who are directly employed by Lufthansa.

Franz and Spohr have certainly fulfilled their former boss's wishes. In fact they've gone even further: When negotiations with the union broke down at the start of last week, they didn't go into arbitration. Instead, they allowed the dispute -- which has been bubbling up for more than a year -- to escalate further, consciously paving the way for the first major industrial action by flight attendants in the company's history.

As expected, thousands of stranded passengers were none too pleased by the first strike on Friday at Frankfurt Airport, Germany's busiest. Lufthansa had to cancel nearly half of the 360 flights scheduled to take off on Friday morning, and the airport almost ground to a complete halt until 2 p.m. Lines of waiting passengers in Terminal 1 wound their way through several parts of the building.

There was even uproar in the luxurious and normally serene first-class terminal, as furious frequent fliers ranted at Lufthansa staff. To add to the disarray, flight crews waved placards with anti-Franz slogans directly opposite, at one of the entrances to the airport site.

The strike action continued on Tuesday. The UFO union said that cabin crew at Berlin's Tegel airport would strike from 5 a.m. to 1 p.m., while flight attendants at Frankfurt were due to strike from 6 a.m. to 2 p.m. Strikes were also set to begin at Munich airport at 1 p.m. and last until midnight. Around 190 flights were cancelled at Frankfurt alone, Lufthansa announced on its website.

Angry about Cost Cutting

Nicoley Baublies, 39, was pleased with how the first day of action went. Baublies heads the UFO union and is a Lufthansa chief flight attendant by profession. His biggest problem last Friday was the empty battery on his cell phone. His biggest triumph is that his union has recruited some 2,000 Lufthansa staff as members since April.

The conflict is officially over demands for a 5 percent wage increase and profit-sharing for cabin staff and chief flight attendants, also known as pursers. In reality it's also about very different issues. One of these is whether Lufthansa's ambitious cost-cutting program, which was presented in February and is dubbed "Score," can be implemented without permanently disrupting relations within the company.

The list of savings drawn up by Lufthansa is designed to slash costs by €1.5 billion ($1.9 billion), partly at the expense of cabin crews.

The airline has already hired cheap workers employed through agencies to look after passengers on flights in and out of Berlin instead of flight attendants employed directly by Lufthansa. If the company's hardliners get their way, Lufthansa may apply the model to a yet-to-be-founded budget airline similar to the Germanwings subsidiary it already runs. This new airline would take over operation of all European flights with the exception of those to or from Lufthansa's major hubs in Munich and Frankfurt.

But that's not all: To ensure it can compete with Gulf-state rivals like Emirates and Etihad and cut its losses on many of its European routes, Lufthansa even plans to slash expenditure on its pilots. It also wants to cut up to 3,500 admin jobs, a move once considered sacrilegious in the previously peaceful Lufthansa world and therefore likely to trigger more industrial action in the fall.

Underestimating the Competition

Franz and Spohr have repeatedly insisted in staff magazine Lufthanseat that they simply have no choice, if the company is to remain competitive in the fight to attract passengers. The two directors now have a powerful ally in their fight against the Lufthansa workforce: Jürgen Weber, the head of the supervisory board.

While he was CEO and later as chairman of the supervisory board, Weber grossly underestimated the threat from both no-frills airlines like Ryanair and Easyjet and aggressive competitors from the Persian Gulf. He once predicted budget airlines would never get more than a 4 percent share of the European market. They currently have around 40 percent.

Given that Weber routinely delegated the handling of disputes with unions and his workforce to the company's personnel director in the latter years of his time as CEO, it is rather ironic that he is now urging his successors to be tough and take action quickly. But perhaps he has his own reasons for doing so. Weber plans to hands the reins of the supervisory board to former CEO Wolfgang Mayrhuber in May 2013, and presumably wants the Lufthansa house to be in order by then.

That may prove difficult. In addition to the dispute with UFO, Lufthansa could soon be embroiled in similar conflicts with pilots' union Cockpit and service-sector union Ver.di.

Joining Forces

Company negotiators are to meet with representatives of the pilots' union for further wage talks next week. If these talks fail, the pilots could also flex their muscles and maybe even join forces with the disgruntled cabin crews. As it happens, an old collective-bargaining agreement with management already gives pilots better protection against wage cuts and job outsourcing than the airline's flight attendants.

Lufthansa's ground crews, most of whom are represented by Ver.di, may also decide to take action. Last but by no means least, support for the directors' cost-cutting plans is dwindling among managers.

Ever since the company's 1,200 or so top managers discovered at a meeting in early February that a quarter of their jobs would be cut, they too have been extremely worried about their prospects. Some of the almost 300 top managers who are set to soon lose their jobs have repeatedly leaked sensitive information. Most of the anger is directed at the troika of Weber, Franz and Spohr.

There are even grumblings within the supervisory board itself because Weber is insisting on his chosen successor -- Mayrhuber -- in the face of strong opposition. Critics accuse Mayrhuber, an affable Austrian, of having caused most of the airline's current problems, with the support of his mentor Weber.

Plenty to Discuss

The supervisory board will therefore have plenty to discuss at its next meeting on Sept. 19. Whether the current UFO strike will be settled by then is less certain.

Bolstered by the success of Friday's strike, union leader Baublies boasted that it was only the opening salvo. But that was already enough to cause massive disruptions. "We will definitely continue and expand our action," he announced.

"And next time," added one of his colleagues menacingly, "we'll be bringing the big guns out."

Translated from the German by Jan Liebelt


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