On Monday, the management of the Lufthansa subsidiary Eurowings called on the Vereinigung Cockpit pilots' union to end the three-day strike immediately. A circular letter addressed to the workforce shows that a deadline of 21:30 p.m. was set for the re-registration.
The pilots of the airline Eurowings, who are members of the Cockpit Association, have been on a three-day strike since midnight. The employee representatives had called for this because the most recent negotiations had not led to an agreement and the management's offer was insufficient from the point of view of the pilots' union.
Due to the labor dispute, numerous flights had to be canceled on Monday. Some airports have already sent out press releases for Tuesday with information about Eurowings flights, which according to the current state of affairs will be cancelled. Those connections operated by Eurowings Europe, Air Baltic, Tuifly, Avion Express Malta and other wet lease partners are not affected by cancellations.
The introduction to the Eurowings management circular addressed to the workforce reads, among other things: “Let’s not beat around the bush: in October 2022 our company is in a dangerous downward spiral. Due to the renewed wave of strikes by the Cockpit Association, we are once again leaving tens of thousands of Eurowings customers out in the rain this Monday. Many of our colleagues have been working continuously for days to present at least half of the flight program - and to save what can be saved. Our sincere thanks go to them for all the hard work they do day in and day out in crisis mode.”
Eurowings can no longer bear strike costs
Furthermore, one writes that one cannot simply take note of “home-made strike damage in the millions”. You can hardly compensate for this "after two years of permanent grounding". The managing directors also write: "As if there had never been a pandemic including almost bankruptcy and as if our core market Germany was not in the midst of a recession, the Cockpit Tariff Commission of Eurowings Germany is insisting on a list of demands, the financing of which our company is obviously overwhelmed".
The company management then sharply criticizes the behavior of the Cockpit Association and claims that around 80 percent of their demands have been met. “The VC is not willing to compromise – not even with the recent offer of ten additional days off per year, three less working hours per week, proceedings in first class on Deutsche Bahn and about 20 other points. For weeks, the collective bargaining committee has been ignoring all personal talks aimed at negotiating a compromise that doesn't overburden our company financially. Instead, it takes up the sharpest sword of collective bargaining policy: strike,” reads this circular.
Threat of downsizing of Eurowings
The collective bargaining commission of the Cockpit Association was asked to “stop the strike measures with immediate effect and return immediately to the negotiating table. We asked for feedback by 21:30 p.m. today. We are only bound by our offer in the version of October 13.10.2022, XNUMX until then. We remain ready to continue the talks immediately." The Eurowings management sees it as their duty to “break this downward spiral of ever new million-dollar claims”.
The Eurowings management then threatened, because every additional day of the strike would mean that financially it would be less and less able to meet the demands of the Cockpit Association. "In this respect, there is no question that our offer cannot be maintained in this way if the economic viability is further burdened. The VC is forcing us on this course, which is foreign to us," said the Eurowings board in the circular. "With more than 4.000 Eurowings employees, we have an obligation to end this escalating strike on the spot - or else to clearly show the consequences of the ever-new millions in damage. The strike costs caused by VC and the demands made of Eurowings thwart our growth plans and, on the contrary, lead to a downsizing. If we wake up tomorrow morning and simply continue to have our company on strike, VC will not only jeopardize the prospects of flight operations at EW Germany, but increasingly that of Eurowings as a whole. We must not and will not allow that."
Lufthansa was able to double revenue in the third quarter of 2022
In stark contrast to the presentation of the management of Eurowings is an announcement by the parent company Lufthansa. This announced on Monday evening that group sales had almost doubled to 2022 billion euros in the third quarter of 10,1. Adjusted EBIT was around 1,1 billion euros in the third quarter (previous year: 251 million euros). Strikes had a negative impact of around 70 million euros on earnings.
On a provisional basis, the Lufthansa Group achieved an adjusted free cash flow of around 400 million euros in the third quarter (previous year: 43 million euros). Net debt fell to around EUR 6,2 billion in the third quarter (June 30, 2022: EUR 6,4 billion). The net pension liabilities fell to around EUR 2,1 billion (June 30, 2022: EUR 2,8 billion) due to the further increase in the valuation interest rate.
Due to the positive development in the third quarter, the current booking situation, which shows continued strong demand for air travel in the coming months, and the expectation of another record result from Lufthansa Cargo in 2022, the Lufthansa Group is raising its forecast for the full year, except currently unforeseeable circumstances. The group now assumes that it will be able to achieve an adjusted EBIT of over EUR 1 billion. The group also expects an adjusted free cash flow of over EUR 2 billion in 2022. The group will present the final quarterly results on October 27, 2022.