Europe airlines suffer industrial issues: Lufthansa pilots to strike again

European carriers’ shares were down with wider markets on Monday (22-Mar-2010), which fell for a third consecutive session. In key markets, UK’s FTSE (-0.1%) was down, while Germany’s DAX (+0.1%) and France’s CAC (+0.1%) gained slightly.

Lufthansa pilots to strike again, British Airways cabin continues for third day

Lufthansa gained marginally despite pilots union, Vereinigung Cockpit Union stating during trading that the carrier’s pilots plan to conduct a four-day strike between 13-Apr-2010 and 16-Apr-2010, after failing to resolve a dispute over pay and job security that already resulted in strike action in Feb-2010. That action resulted in approximately 2,000 flight cancellations and EUR50 million in losses for the carrier. The union stated the next strike action was delayed to avoid disruption over the Easter holiday period and to give the carrier's management "time to realign its course". The strike action will also affect operations of Lufthansa Cargo and Germanwings.

Lufthansa stated it hopes to resolve the dispute and avoid the strike action over the coming week. Lufthansa stated it made an offer to the union this week that included a pay freeze in 2010 in exchange for job guarantees, with the union reportedly stating it would only accept a freeze in return for further concessions on job security. One of the pilots' main concerns is that the airline, which aims to reduce it cost base by EUR1 billion by 2011, is seeking to expand at its (cheaper) foreign units and reduce its Germany-based operations.

A number of European carriers are suffering at present from strikes by staff members. British Airways' (+1.0%) cabin crew strike continued for a third day on Monday. However, shareholders to be indifferent about the strike, with BA estimating the industrial action has cost it GBP7 million per day. Cabin crew plan to hold a second phase of the strike on 27-Mar-2010 to 30-Mar-2010.

Alitalia and Icelandair operations were also affected by strikes over the weekend. Alitalia’s pilots, cabin crew and baggage handlers walked off the job for four hours on 22-Mar-2010. Pilots and cabin crew held the industrial action in protest of the carrier’s restructuring plans, while baggage handlers are concerned over an inability to reach an agreement for their new contract. Icelandair flight mechanics meanwhile conducted a strike on 22-Mar-2010, after talks between their union and the airline broke down.

Air France-KLM looking to compete with LCCs

Air France-KLM also gained slightly after CEO, Pierre-Henri Gourgeon, stated the carrier is in the process of developing a new strategy to better compete with LCCs. Mr Gourgeon stated the carrier plans to offer more user-pays service, but will continue to offer a complete product.

El Al (-3.2%) and Aegean Airlines (-2.3%) meanwhile took the day’s biggest falls.

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Europe selected airlines daily share price movements (% change): 22-Mar-2010