Lufthansa pilots reach pay deal

June 8, 2001
Web Posted at 0944 GMT

FRANKFURT, June 8 (Reuters) - The pilots union for German airline Lufthansa (FLHA) on Friday said it had reached an arbitration agreement with management, a breakthrough signalling an end to the airline's worst-ever pay dispute.

Union spokesman Georg Fongern told Reuters the two sides -- who began wrangling four months ago, triggering Lufthansa's first-ever pilot strike in May -- reached a deal in mediation led by former foreign minister Hans-Dietrich Genscher.

"We agreed to the proposal of the mediator," Fongern said.

Lufthansa confirmed that a deal had been reached but declined to provide more details. A joint news conference is scheduled for 1100 GMT.

Union spokesman Ruediger Fach said the mediation agreement would now be put to the pilots for final approval in a vote expected some time next week.

Lufthansa shares were up 2.13 percent at 23.04 euros after the announcement, extending gains from Thursday, amid market optimism for a solution. The DAX index of German blue chip stocks was up 1.09 percent at the same time.

"It looks as though the market has received the news well without really knowing what the result is," one trader said.

Investors are eager for more details on the agreement amid questions about how much Lufthansa has agreed to increase pilots' pay.

Germany's tabloid daily Bild Zeitung, in the summary of a story to appear in its Saturday edition, said Lufthansa had reached a three-year deal granting pilots just under 20 percent in pay rises.

Vereinigung Cockpit, which represents 4,200 pilots, sought a 24-percent salary increase with profit sharing. A seventh round of negotiations broke down in May after the airline's offer of hikes up to 13.6 percent for 2001 fell short of pilot wishes.

Following the breakdown, the two sides agreed to enter mediation with the former foreign minister presiding.

Pilots went on strike three times in May, disrupting travel for tens of thousands of passengers across Europe and creating the worst labour dispute in Lufthansa's 75-year history.

The pilots agreed not to strike during the mediation process.