Lufthansa reaches crisis deal with union to cut costs

BERLIN (Reuters) – German airline Lufthansa said on Wednesday it had reached a new deal with trade union Verdi to cut 200 million euros ($235 million) in costs in return for making no compulsory redundancies in 2021.

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.

Lufthansa 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 reduce 22,000 full-time jobs.

Lufthansa said 24,000 ground staff would forgo their usual Christmas bonus in 2020 and 2021 as well as vacation bonuses until the end of 2021, while 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.

(Reporting by Emma Thomasson; Editing by Hugh Lawson and Mark Potter)