Wow: Lufthansa Pilots Volunteer 45% Pay Cut For Two Years

Lufthansa pilots have volunteered to offer a 45% pay cut for more than two years in order to avoid job furloughs. It’s a tempting offer, but I’m still not sure it will work.

Lufthansa Pilots Offer Surprise Concession*

Without being asked, Lufthansa pilots have volunteered to accept salaries reduced by 45% through June 30, 2022.

Markus Wahl, President of Vereinigung Cockpit, the union representing Lufthansa pilots, said:

“The pilots of Lufthansa, Lufthansa Cargo, Lufthansa Aviation Training and Germanwings are committed to their responsibility. Therefore, in addition to a short-term additional reduction in short-time work benefits, we have offered the Group Management Board a significant reduction in wage costs until June 30, 2022. For the individual pilot, this means a salary that is up to 45% lower than in previous years.”

That’s more than two years at a reduced pay scale, resulting in savings projected to be €350 million.

So what’s the catch? I placed the asterisk (*) above because the salary cut concession appears to be conditioned upon perhaps an even great concession from Lufthansa: avoid job cuts. Whal added:

“We have always said that, as top-level employees, we are committed to our special responsibility, in good times and in bad, even if this means painful cuts. Here is the proof. We hope that together with the Lufthansa management we can bring the company back to its old strength. It is important that the jobs are preserved and that protection against dismissal is agreed.”

That last line is key. It’s a bold strategy.

Why This Probably Won’t Work…

While the opening bid is fair and actually quite commendable, the Lufthansa Group earlier announced plans to reduce its fleet size by 100. With new deliveries on the way, that means Lufthansa will have to retire at least 100 aircraft from its fleet if it new fleet size will drop from 750 to 650 aircraft.

Lufthansa has further indicated it does not expect demand to recover until 2023.

With that comes the sad reality that many pilots will no longer be needed. Will a 45% systemwide reduction in pay make up the difference? Perhaps. But I’d expect Lufthansa to cut flight attendants and pilots as it tries to scale back costs, especially as it has focused its retirements to certain aircraft. Sure, it is possible to retrain pilots on new aircraft, but that represents a further cost during a time of austerity.

CONCLUSION

I’m impressed by the solidarity shown by pilots in this voluntary concession. By acting as a united front, pilots hope to spare more job cuts than are necessary. Still, with Lufthansa planning to cut its fleet size by 100, I don’t see retirement and natural attrition as sufficient to cover what will soon be a big surplus of pilots. Thus, I think the next round of negotiations will have to account for a necessary cutback in pilots.