Lufthansa and pilots' union Vereinigung Cockpit agree on mediation

The background to the conflict is the long-simmering dispute over the collective bargaining framework agreement, which governs the working conditions of flying personnel. Vereinigung Cockpit had most recently threatened industrial action if the negotiations did not result in a negotiated settlement. With the mediation now agreed upon, the conflict is being transferred into a structured procedure.

Lufthansa pilots have been represented by Vereinigung Cockpit for many years. The union is one of the largest pilots' unions in Germany in terms of membership and conducts collective bargaining negotiations for cockpit employees of several group companies, including Lufthansa Cargo, Lufthansa CityLine, and Eurowing. The conflict therefore had direct effects on a large part of the group's flight operations.

What the mediation means

With the mediation, a neutral mediator will be appointed to mediate between the parties and develop a proposed solution. During the procedure, a peace obligation usually applies, suspending industrial action by both sides. For the coming weeks, this means that no strikes by cockpit staff at Lufthansa and the affected group subsidiaries are to be expected.

Observers interpret the step as a sign that both sides are interested in an amicable solution. Nevertheless, it remains open how great the willingness to compromise on the central points of dispute actually is. Should the mediation fail, industrial action could return to the agenda at a later date.

Outlook for the coming weeks

The conflict is embedded in a phase in which the aviation industry is facing rising costs, staff shortages, and growing competition from new providers. An agreement on the collective bargaining framework agreement would therefore be significant not only for the employees directly, but also for the competitiveness of the Lufthansa Group and the stability of the flight offering.

However, the stock market barely rewarded the news of the mediation on Monday: In the MDAX, the German index for medium-sized companies, the Lufthansa share closed slightly lower. The trading day was overall weaker, while analysts at Goldman Sachs Group Inc. had most recently assigned Lufthansa a Sell rating.

Most recently, an incident had also caused a stir in which a Lufthansa aircraft had to make an intermediate landing due to an indefinable smell on board. The stock reacted with price losses. Even if there is no direct connection to the collective bargaining dispute, the incident illustrates the range of burdens to which the group is currently exposed.