Chairman Jürgen Weber is attempting to stir up an internal debate at Lufthansa in a bid to persuade the pilot-dominated DAG union to pull back from strike action.
In an unprecedented move Weber sent a letter to all Lufthansa employees in late January outlining the threats to Lufthansa and the company's future strategy.
DAG was balloting its members at presstime over further action - it held two two-hour 'warning' strikes in mid-December - with the result due at the end of February. The dispute centres on an offer of new contracts which run until the end of 1998 and offer an immediate one-off cash payment and a 1.7 per cent wage rise from April 1998. DAG is demanding a 4 per cent wage rise and job guarantees and refuses to sign anything other than a 'normal' 12-month contract. Ilona Köbke, a DAG official, says the proposed 27-month contract is too long and puts her members at the 'mercy' of future management decisions.
Lufthansa refuses to comment on the dispute - the two sides last held talks on 9 December - but management is understood to have made an 'unofficial' promise to DAG that it would not oppose strike action after 12 months if the union were still unhappy with the course the company was taking. Under German law, strike action is forbidden during the contractual period.
The DAG's position contrasts with that of Lufthansa's other main union ÖTV, representing cabin and ground crew, which accepted the terms offered by management last year. Ingo Marowsky at the ÖTV says the key part of the deal was that it guaranteed job security.
This jars with DAG's demands. Lufthansa is understood to have offered both unions similar job security pacts but Köbke maintains she is still looking for 'guarantees that jobs remain in Germany and in the company'.
The concern among management is that the rapid changes over the last five years have not been communicated properly to DAG, which is dominated by pilots but also represents technicians and ground staff. Hence Weber's letter.
The letter identifies seven major competitive threats: the proposed tie-up between American Airlines and British Airways and the latter's franchising operations; Deutsche BA's shift to a purely domestic focus with a 72 per cent increase in flights; the federal cartel office's warning to Lufthansa for overpricing on Berlin-Frankfurt; Air France's expansion of feeder services into Germany; Swissair's bid to pull more traffic through its Zürich hub; Continental Airlines' increase in services; and the threat posed by low-cost operators.
To counter these threats, the carrier is looking to further integration with its global alliance partners, the increased use of CityLine, and franchising through the 'Team' brand. Other areas of action include alliance talks with British Midland, which could lead to Lufthansa handing over UK routes to the independent, but the focus is to establish a credible competitive threat to BA at Heathrow, where British Midland holds 13 per cent of the slots. Lufthansa is also studying ways to stem 'heavy losses' on Berlin routes, possibly through franchising.
As the dispute rumbles on, Lufthansa has announced plans to combine the two divisions responsible for sales and operations into one stand-alone profit centre. The creation of a passenger services business unit in April will cut management and administrative positions by 10 per cent.
Source: Airline Business
