Lufthansa Misses Deadline for Staff Cost Cut Deal With Unions

Deutsche Lufthansa AG missed its deadline to secure union backing for lowering labor costs, underscoring the challenge the German carrier faces to rebound from the coronavirus.

Having set a June 22 target date, two weeks of intensive talks failed to produce an agreement, the carrier said in a statement on Tuesday. Talks are ongoing, it added.

While Europe’s biggest airline has said it might need to shed 22,000 of its around 140,000 staff as it downsizes flying operations, the deal under discussion with unions centers around a smaller, temporary cost-cutting package to help bolster liquidity. Lufthansa’s Vereinigung Cockpit pilots union has said it’s offered 350 million euros ($395 million) in savings until 2023.

Verdi, the union representing ground staff, has postponed its talks with the airline until after a shareholder vote on a bailout deal Thursday.

Missing the deadline could dent Lufthansa’s bid to show investors it’s making progress on restructuring plans ahead of the crunch vote on the 9 billion-euro German bailout package. The airline has said it could be forced to enter insolvency proceedings if the deal isn’t approved.

While airlines like Ryanair Holdings Plc and IAG’s British Airways have announced swingeing job cuts in response to the crisis, Germany’s stringent labor and co-determination laws that give employees a say in management decisions mean Lufthansa faces protracted negotiations before it can follow suit.

©2020 Bloomberg L.P.

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