Lufthansa and pilots reach pay deal, but clash over cost cuts

Lufthansa and a pilots' union have accepted pay recommendations from a mediator, though the airline said it planned to offset the cost by using more crew on cheaper contracts in a move that could jeopardize the deal. Lufthansa, which has been dogged by a succession of strikes, said on Wednesday it had agreed to increase pay for 5,400 pilots by 8.7% in several steps, as well as one-time payments worth a total of E30m, adding around E85m to its annual costs. The agreement boosted Lufthansa shares, which were up 1% by 1221 GMT and among the top DAX gainers. To make up for the added expense, Lufthansa said 40 new aircraft due for delivery would be staffed not by crew on collective labour agreements at its core brand, but by crew from elsewhere within the group. Board member Harry Hohmeister had last month raised the prospect of shifting new planes to other parts of the group or even setting up a new unit to keep costs down. Pilots' union Vereinigung Cockpit (VC) said the proposals would be put to a vote of members, with a result expected by the end of March, but spokesman Markus Wahl said the plans to shift the planes could affect the outcome.<br/>