Germany’s Deutsche Lufthansa Aktiengesellschaft DLAKY, which has, of late, been plagued by employee-related issues, finally witnessed some positive movement on the labor front. The carrier recently inked a 33-month deal covering around 30,000 employees. The deal, which runs through Dec 31, 2017, relates to the wages and pensions of the covered employees.
Following the agreement reached with trade union ver.di, employees (on the rolls between Apr 2015 and Dec 2015) will be given a lump sum one-time payment of €2,250 while trainees will receive a one-time payment of €600. In addition, both employees and trainees will be entitled to receive a 2.2% annual pay hike over the next two years. Employees at various units like Lufthansa Cargo and Lufthansa Technik are covered under the deal. The deal also brings good news on the pension front for employees including those who will be hired by the carrier on and from Jan 1, 2016. Per the agreement, employees will be part of the employer-funded pension plans with an employee contribution of 1%.
The said deal with the ground staff does not, however, address all labor troubles at the German carrier. The carrier’s dispute with pilots relating primarily to pensions and retirement benefits has already resulted in massive flight cancellations and loss of profits for the carrier. Moreover, Lufthansa’s plan to expand low-cost offerings has also come under attack from the pilots.
Moreover, strikes by its cabin crew earlier in the month have also hampered Lufthansa’s operations. The cabin crew strike was called off last week following some apparent progress in talks. The carrier is now looking forward to its Dec 2 meeting (employment summit) with various unions to discuss the long-standing labor dispute. We expect investor focus to remain on updates pertaining to the meeting, going forward.
Zacks Rank
Lufthansa currently carries a Zacks Rank #1 (Strong Buy). Other top-ranked stocks in the airline space include SkyWest SKYW, Hawaiian Holdings HA and Controladora Vuela Compañía de Aviación, S.A.B. de C.V. VLRS. All the three stocks sport the same Zacks Rank as Lufthansa.
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