Lufthansa strike suspended, BA cabin crew join fray

Lufthansa planes are pictured at Frankfurt Airport February 22, 2010.

FRANKFURT/LONDON (Reuters) - Lufthansa pilots in Germany agreed to suspend for two weeks a strike that grounded about 900 flights on Monday, just as rival British Airways' cabin crew voted to join the fray to protest harsh cost cuts.

Some 4,000 Lufthansa pilots took part in a stoppage on Monday that was meant to last for four days, leaving thousands of passengers around the world stranded, on concerns the company could try to cut staff costs by shifting jobs to foreign units.

In a hastily called court hearing, pilots' union Vereinigung Cockpit (VC) agreed late on Monday to suspend the strike until March 8 to give the deadlocked parties a chance to resume talks.

"VC has said that it is prepared to resume talks, and we are sticking with that," said VC negotiator Thomas von Sturm. Lufthansa said it welcomed the decision, though it will take a few days until its flight operations have normalized again.

Airlines are reeling from the aviation industry's worst year ever, in which demand dropped faster than capacity could be cut, but workers are becoming increasingly impatient with pressure from employers to tighten their belts.

Lufthansa aims to cut 1 billion euros ($1.36 billion) of costs by 2011, to become more lean while expanding abroad.

Europe's national flag carriers have been trying to cut their costs as they lose market share to low-cost airlines such as Ryanair and EasyJet whose no-frills offers lure customers looking to cut their travel spending.

British Airways wants three-quarters of its crew to accept a pay freeze this year, along with other cost-cutting measures. BA cabin crew voted in favor of a strike to protest the cost cuts.

This is their second attempt at industrial action after a court forced the workers to abandon plans for a 12-day strike over Christmas that would have affected a million travelers.

Union Unite said on Monday that no dates for the work stoppage had been set but reiterated that crew would not strike over the Easter holiday at the start of April.

British Airways said the decision to strike was "completely unjustified" and vowed that it would "not allow Unite to ruin this company."

MAKING DEMANDS

Adding to the upheaval, French air traffic controllers plan to go on strike for five days from Tuesday to protest Europe's single sky policy, causing flight cancellations at the Orly and Paris-Charles de Gaulle airports.

One of the concerns raised by Lufthansa employees has to do with pay. The pilots have offered to forego increases if in return they get some control over which routes or pilot jobs are transferred to other group airlines.

Last September, Lufthansa completed a shopping spree, adding Brussels Airlines, Austrian Airlines and BMI to its stable of carriers. It also started Lufthansa Italia.

Lufthansa has rejected that demand, saying it would require ceding control over parts of business strategy to its workers.

Lufthansa's last major dispute with pilots in 2001, which resulted in a costly pay increase, had to be mediated by Germany's former foreign minister, Hans-Dietrich Genscher, as political pressure over strikes mounted.

The starting salary for a captain at Lufthansa is about 115,000 euros, more than for instance Easyjet's starting salary at just over 80,000 pounds ($123,700), according to the companies' recruiting websites. Media reports put the top end of Lufthansa pilots' salaries at about 325,000 euros.

"As we have been saying last week, those pilots want to be treated like managers but are acting like underpaid bus drivers," said a local trader.

Lufthansa expects the pilots' strike will cost it about 100 million euros ($135 million), in addition to lost ticket sales and possible damage to its reputation as it grounds at least 3,200 flights out of a total 7,200 over the four-day period.

Shares in Lufthansa ended Monday's trading session 1.7 percent lower at 10.995 euros, while British Airways was down 1.6 percent.

(Additional reporting by Anna Willard; Editing by Richard Chang)