Lufthansa, trade union agree to mediator's proposals: sources

FRANKFURT (Reuters) - German airline Lufthansa (LHAG.DE) and a trade union have agreed to a mediator's proposal to end a long-running conflict over pay and work conditions, a source familiar with the negotiations told Reuters late on Monday.

While both sides have refrained from officially saying whether the arbitration was a failure or a success, a statement from mediator Bert Ruerup said late on Monday he was holding a news conference on Tuesday along with negotiating partners.

The statement said the conference would announce the mediation results.

Another source, from Lufthansa, told Reuters the company would not stand in the way of a deal.

The airline has been resisting union demand for 5 percent pay increases and guarantees against outsourcing its cabin crew as it tries to slash costs in a plan to improve annual earnings by 1.5 billion euros ($1.91 billion) by end of 2014.

Lufthansa has offered a 3.5 percent increase and wants a wide-ranging revamp of the airline in response to cutthroat competition from no-frills airlines like Ryanair (RYA.I) and Easyjet (EZJ.L) and Gulf carriers, which have been gnawing into the market share of established airlines in Europe.

The UFO trade union, representing around 18,000 cabin crew, went on strike for three days in early September, forcing Lufthansa to cancel more than 1,000 flights, but agreed to a truce and go into mediation after the airline promised it would not outsource staff in Berlin.

German media have previously reported that the mediation talks had come close to failing several times already, although the German daily Tagesspiegel, citing company sources, said earlier on Monday that UFO and Lufthansa would accept Ruerup's proposals.

Even if the negotiators have accepted Ruerup's proposals, the UFO members would still have to formally vote on them.

UFO has promised not go on strike until end of November.

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(Reporting by Peter Maushagen and Marilyn Gerlach; Editing by Richard Chang)