BERLIN (Reuters) - German airline Lufthansa
Lufthansa warned last week it would burn through more cash in the fourth quarter than in the third and that further restructuring measures would weigh on its results as it struggles to cope with the effects of the COVID-19 pandemic.
The airline and its subsidiaries, Eurowings, Swiss, Austrian and Brussels Airlines, are slashing their schedules, fleet and staff, with air travel not expected to recover to pre-pandemic levels before 2025. It aims to cut 22,000 full-time jobs.
"We have taken a first important step towards reducing ground staff personnel costs," HR head Michael Niggemann said in a statement. "However, we cannot slow down our efforts in continuing to work on crisis-management measures."
The deal with Verdi comes after months of talks that were repeatedly broken off. Verdi accused the company of seeking to cut jobs even after it took a 9-billion-euro government bailout.
Lufthansa said 24,000 ground staff would forgo their usual Christmas bonuses in 2020 and 2021 as well as vacation bonuses until the end of 2021. The company will also cut the amount it tops up government payments to staff working short-time.
Together these measures will cut personnel costs by up to half in 2021, depending on the total hours worked.
In return, Lufthansa promised not to make forced layoffs in 2021, while offering partial retirement and voluntary redundancy programmes. It will continue talks on long-term cuts in labour costs from Jan. 1, 2022 when government compensation ends.
Verdi said its members still had to vote on the deal.
Earlier on Wednesday, the Vereinigung Cockpit union representing Lufthansa pilots offered to contribute 450 million euros to cost cuts by extending until June 2022 a deal to trim salaries and pensions that currently ends at the end of this year.
The airline has around 5,000 pilots, many of whom are currently receiving short-time compensation.
(Reporting by Emma Thomasson; Editing by Hugh Lawson, Mark Potter and Pravin Char)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU