Up to 22 000 job cuts at Lufthansa
Lufthansa will cut 22 000 jobs to try and overcome the difficult financial situation caused by the corona pandemic. Lufthansa’s objective will be to avoid redundancies “as much as possible”. To this end, the company is counting on temporary unemployment and agreements with the trade unions.
This reduction in the workforce will not only affect Lufthansa but also its subsidiaries. Swiss, Austrian, Brussels Airlines, and Eurowings belong to the group. Brussels Airlines wants to part with 1 000 people, almost a quarter of the workforce. Negotiations with the staff are very tense. They do not want permanent cuts in salaries, as requested by the management.
In the meantime, the negotiations between the Belgian government and Lufthansa on aid to Brussels Airlines are close to conclusion. The biggest obstacle will be the mechanism of sanctions if Lufthansa does not respect the agreements. In that case, either Lufthansa would have to pay a fine, or the loan granted by the government would be converted into shares. But Lufthansa does not want government interference in its affairs.
At the beginning of June, Lufthansa boss Carsten Spohr still estimated that the company was overstaffed by 10 000. But the outlook has become more difficult. “Demand in air traffic will recover very slowly,” the company says.
Lufthansa will also dispose of 100 of the 763 aircraft in its fleet. By September, its number of flights will be no more than 40% of what was planned before the pandemic.
These measures are part of a broader restructuring plan. The group has already recorded an unprecedented neat loss of €2,1 billion in the first quarter. To avoid bankruptcy, Lufthansa has received €9 billion in state aid and guaranteed loans. In return, the German State received a 20% capital share, and Lufthansa gives up 24 take-off and landing slots at Frankfurt and Munich airports.
As a result, Berlin has now been accused of co-financing the cuts in the workforce. “Nine billion euros for a company worth 4 billion euros (on the stock exchange), while at the same time not having a say in the decisions taken: when Lufthansa announces that it is cutting 22 000 jobs, the federal government is to blame,” radical left-wing Die Linke party leader, Bernd Riexinger, said in a Twitter post.
To justify these job cuts, the head of human resources at Lufthansa puts forward one argument: “Without a significant reduction in personnel costs during the crisis, we will lose the opportunity for a better recovery.”
Negotiations in Belgium
The Belgian company Brussels Airlines wants to part with 1 000 people. The Belgian state is in negotiations with Lufthansa about financial aid for its Belgian branch. The Swissport bankruptcy and its 1 500 redundancies have put pressure on the government to find a favorable outcome. The aid would amount to €300 or 400 million, far from the €9 billion from the German State.
Austria has already signed a deal at the beginning of the week with Lufthansa to safeguard its subsidiary Austrian Airlines. The Austrian plan is worth €450 million: direct aid of €150 million, and a loan of €300 million. Lufthansa will inject €150 million into its Austrian subsidiary. The Germans are guaranteeing growth for the Vienna hub for ten years, similar to that of the group’s other hubs.
Swiss aid with a guaranteed loan of €1,2 billion to the Swiss and Edelweiss subsidiaries has also already been approved.