* Airline says wage deal is valid for two years
* Says deal is effective from Jan. 1, 2013
* Says has promised no mandatory job cuts
* Lufthansa shares up 1 pct in line with blue chips
WIESBADEN, Germany, Nov 13 Lufthansa
agreed on Tuesday to raise cabin crew pay by nearly four percent
over a two-year period from January under a new deal with unions
that will remove the threat of more strikes over the Christmas
The new pay agreement, negotiated under arbitration, caps
nearly six weeks of talks that started on Sept. 12 in which
trade union UFO insisted on a 5 percent pay hike and Lufthansa
countered with a 3.5 percent increase.
The airline, which is in the midst of a cost-cutting
programme to improve annual earnings by 1.5 billion euros by end
of 2014, is struggling to cope with cut-throat competition from
no-frills airlines like Ryanair and Easyjet and
"The compromise is very painful for Lufthansa," Lufthansa
Passenger business board member Peter Gerber told reporters. He
said the pay deal meant an additional 33 million euros ($42
million) in costs.
Under the deal, the union, which represents around 18,000
cabin crew, also secured a promise from Lufthansa that there
would be no mandatory job cuts until the end of 2014.
Additionally, Lufthansa said it would not outsource cabin
crew staff until 2016.
"This is very important particularly during these times when
jobs are being cut elsewhere in the company," UFO's Nicoley
Lufthansa said last month it would step-up cost-cuts to
counter rising fuel prices and limited growth in its core
market, hinting that more job cuts could follow.
The airline has already frozen investments, cut jobs and is
combining its loss-making European short-haul unit with its
low-cost carrier Germanwings to improve earnings.
Other airlines in Europe are cutting jobs because of
high-costs and competitive pressures. Spanish carrier Iberia
is to cut almost a quarter of its workforce.
UFO, which had been in talks with Lufthansa over pay since
middle of last year, staged a series of strikes in early
September, forcing Lufthansa to cancel more than 1,000 flights.
The union eventually agreed to arbitration and to a truce,
promising not to hold any strikes until the end of November,
while mediation was going on.
During the talks, UFO warned that it had enough funds to
stage a long strike if the arbitration failed.
Mediator Bert Ruerup, who proposed the pay package , said the
deal gave the airline the flexibility to structure a new wage
scheme for new hires to make it more competitive, while cabin
crew would get a bonus linked to the company's profit margin.
Ruerup said pay would increase in 2013 by nearly 4.6
percent. Lufthansa said the rises over a two-year period to the
end of 2014 would average 3.95 percent.
The new pay deal still has to be formally approved by a
majority of UFO's members.