May 20, 2020 / 6:22 PM / 16 days ago

Lufthansa's Austrian unit agrees savings package

VIENNA (Reuters) - Lufthansa’s (LHAG.DE) Austrian unit AUA has agreed a short-time work model and salary cuts of up to 15% with its on-board staff and 20% cost reductions with its suppliers and no longer sees itself immediately threatened by insolvency, it said.

Negotiations between the government in Vienna and Austrian Airlines (AUA) and Lufthansa management regarding a 767 million euro ($842 million) request for state aid were ongoing and are expected to continue over the weekend, a spokesman said on Wednesday.

A decision regarding financial support from the German government for AUA parent Lufthansa is to be expected shortly, according to Chancellor Angela Merkel.

Governments across the world are intervening to prop up airlines as estimated revenue losses from the coronavirus pandemic have climbed to $314 billion, according to the International Air Transport Association.

AUA said it would cancel all regular flights until June 14. The carrier hopes to resume flights within the German speaking region later that month before gradually expanding services to cities including Paris and London, and holiday destinations such as Greece in the summer holiday season, the spokesman said.

AUA’s on-board staff, around 3,800 of a total 7,000, have agreed to extend short-time work agreements until 2022 and afterwards accept socially staggered salary reductions of 5-15% until 2024, the spokesman said. Negotiations with ground staff were ongoing.

Reporting by Kirsti Knolle; Editing by Kirsten Donovan

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