UPDATE 1-Germanwings escape strikes after pay compromise

Sat Jul 6, 2013 8:25am EDT

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BAD HONNEF, Germany, July 6 (Reuters) - Lufthansa's budget carrier Germanwings will be spared painful strikes during the nascent summer holiday season after reaching a preliminary accord with cabin crew on higher wages.

An improved offer by management for up to 5.9 percent more pay over two years, one-off payments of as much as 1,500 euros ($1,900) and a commitment to grant workers unlimited contracts after the probation period broadly meets the Ufo labour union's key demands, union chief Nicoley Baublies said on Saturday.

Both sides will use the compromise reached in all-night talks to try to work out a detailed new wage contract over the next four weeks, Baublies said at a news conference near Bonn.

The Independent Flight Attendants Organisation (UFO) represents around 700 cabin crew at Germanwings. The union had sought a 5 percent salary increase, fewer temporary working contracts and the possibility for Germanwings cabin crew to transfer to parent Lufthansa.

"We pushed the envelope with our offer," Germanwings managing director Axel Schmidt said in a statement. "The compromise very closely resembles the union's demands but it doesn't jeopardise our competitiveness."

A strike would have hurt Lufthansa's move to cut costs at its European short haul business, which had been losing money due to competition from budget airlines EasyJet, Air Berlin and Ryanair.

Ten of Germany's 16 federal states are on summer holidays, usually lasting about 6 weeks per state.

Lufthansa in January transferred most of its European short-haul flights to Germanwings, where costs are 20-30 percent lower than Lufthansa's.

The Germanwings revamp is a major part of Lufthansa's three-year overhaul to boost group operating profit by 1.5 billion euros ($1.95 billion) to 2.3 billion by 2015. ($1 = 0.7792 euros) (Reporting by Peter Maushagen and Marilyn Gerlach; writing by Andreas Cremer; editing by James Jukwey)

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