Lufthansa joins Germany’s list of companies in distress

Lufthansa was once a proud symbol of Germany Inc., standing for the quality and smooth functionality of Europe’s No. 1 economy. But that was before the last week, when a strike by the airline’s pilots stranded more than half a million passengers. As of Wednesday, 4,461 flights had been scratched over six days, with no end in sight to a dispute over wages for pilots. The Lufthansa pilots’ union, known as Cockpit, counts just a few thousand members, but they have the power to paralyse the airline as it grapples with myriad challenges, in particular the growing pains of its low-cost Eurowings affiliate. Lufthansa’s troubles have become Exhibit A in demonstrating how the changes of the 21st century are eating away at decades of cooperation between labor and management that allowed Germany to rebuild and grow after World War II. Those deals, which have given labour a say in management, have allowed Germany to avoid the crippling strikes and violence seen in Margaret Thatcher’s union-busting Britain, say, or over decades in France. But Lufthansa is also the latest example of how the fabled efficiency and competence of some major German companies have fallen into crisis. For Lufthansa, the fight is ostensibly over wages for its pilots, who earn about 30% above the global average, according to Gerd Pontius, of Prologis, the aviation consultant, where he advises more than 50 airlines. The highest-ranked captains easily earn E250,000 a year. While Lufthansa has tried to rebook passengers and keep them moving, impatience is mounting. “Competitors are getting more attractive,” Pontius said. “The strike really drives passengers into the arms of the competition.” Those are the kinds of costs not reflected in Lufthansa’s estimate that each day of the strike costs the airline from E10-15m. The damage over all to the German economy is unknown at this time. Carsten Spohr, the former pilot who is Lufthansa’s CE, knows he has to adapt that motto and squeeze costs.<br/>