May 19, 2024

Germany’s biggest airline has warned that ongoing strikes by thousands of its ground staff and airport workers could hurt its earnings this quarter, after walkouts earlier this year already cost the company more than $100 million.

Lufthansa Group, which owns German flag carrier Lufthansa and several smaller airlines including Austrian Airlines and Eurowings, said Thursday that it expected to suffer a bigger operating loss in the first three months of 2024 than a year ago, partly because of the industrial action.

Strikes by Lufthansa’s ground staff over the past few weeks have so far cost the company nearly €100 million ($109 million) in direct costs, chief financial officer Remco Steenbergen said at a press conference Thursday.

The strikes have also discouraged numerous customers from booking flights — particularly last-minute ”profitable” flights — resulting in a ”significant sales loss” for the company, he added.

The bumpy start to the year follows a stellar 2023. Lufthansa Group reported operating profit of around €2.7 billion ($2.9 billion) — the third-biggest in its history, and up 76% from 2022.

Frankfurt airport closed by strikes

The warning of more losses came on the same day as thousands of the airline’s ground staff staged fresh strikes, forcing flights to be canceled. Their action was timed to coincide with a walkout by security staff that closed Frankfurt airport — one of the world’s busiest hubs for international air travel.

The industrial action “will cause major disruptions and flight cancellations throughout the day, (and) security checkpoints will remain closed,” the airport said in a statement on its Facebook page Wednesday.

Security staff at Hamburg and Dusseldorf airports have also walked off the job.

The Verdi union, which represents 25,000 Lufthansa ground staff, had called for them to go on strike from early Thursday and until Saturday morning. The union, which is pushing for a 12.5% pay rise or at least €500 ($545) more a month for the workers, said the latest round of negotiations with Lufthansa had fallen through.

The company said Wednesday that between 80% and 90% of its flights could be disrupted Thursday and Friday, impacting more than 200,000 passengers.

Marvin Reschinsky, a negotiator for Verdi, said Monday that it was “impossible” to believe that Lufthansa could be so financially successful while “employees on the ground, with hourly wages of sometimes €13 ($14), no longer even know how they are able to make ends meet in the most expensive cities in Germany.”

That financial success means the airline group will pay shareholders a dividend for the first time since 2019, it said in its results announcement Thursday.

Michael Niggemann, Lufthansa’s head of human resources, said Monday that the company was prepared to negotiate with Verdi at short notice, and that it had already made an offer in response to the union’s demands.

“The economic damage is already enormous, and all customers suffer from these strikes,” he added at Thursday’s press conference.

The strikes are just the latest in a wave of industrial action in Germany, famed for its strong legal protections for workers, and follow walkouts by train drivers in January over wages.

Resulting travel chaos this year has compounded the gloomy outlook for Europe’s largest economy, which shrank in 2023 for the first time since the onset of the pandemic, as it grappled with high energy prices and weak demand for its goods at home and abroad.

The International Monetary Fund predicts Germany will be the slowest-growing major economy this year, eking out an expansion of just 0.5%.

GDL, the German trade union representing rail workers, also said its members were going on strike Thursday and Friday. Deutsche Bahn, Germany’s state-owned rail operator, said it expected the industrial action to have a “massive” impact on its operations.

Chris Stern in Berlin and Olesya Dmitracova, Eve Brennan and Rob North in London contributed reporting.

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