Lufthansa is having its fair share of labor relations issues at the moment. The airline has seen several strikes in recent weeks, from both ground workers and flight attendants, which have cost the airline an estimated $271 million so far. Even after the strikes, no progress has been made when it comes to negotiations (at least officially), so more strikes could be on the horizon.
That’s why I find the latest comments from the company’s CEO to be quite curious…
In this post:
Lufthansa CEO confident strikes will end soon
Richard Quest of Quest Means Business just interviewed Lufthansa Group CEO Carsten Spohr about the status of the industrial action, and I can’t help but be a bit confused. Spohr is very confident that these issues will be resolved soon, but not necessarily for the reason you’d expect. While you can watch the interview for yourself below, let me hit on a few of the key points:
- “We have a unique situation of high inflation of the last years and full employment, and that combination I think Germany hasn’t seen in a long, long time, that’s why we indeed see a frequency of strikes in Germany we haven’t seen in a long, long time”
- “But when it comes to Lufthansa negotiations, I’m quite optimistic that we have seen the worst, and we are now coming to an end of this”
- When he’s asked why he’s optimistic about strikes coming to an end, he explains “Lufthansa being a group, we introduced a few years ago that every internal strike is allocated as cost to the labor group which goes on strike, so that has a discipline element attached to it, which in my view makes people understand that internal strikes eventually come to their own disadvantage”
- “I think our staff knows that strikes also are ruining their business model as individuals”, and “in our industry, customers become unhappy, customers choose other hubs”
Can someone help me make sense of this?
In the past I’ve made a list of airline CEOs that I respect most. I would never make a list of airline CEOs that I respect least, but if I did… well, I’ll let you use your imagination 😉
Now, I’m not saying anyone should care about my opinion, as Lufthansa Group has performed pretty well financially, but in terms of passenger experience and labor relations, I can’t say I’m impressed by the airline under Spohr’s leadership. The biggest passenger experience achievement under his leadership was “earning” a Skytrax 5-$tar rating, and even that was taken away.
But anyway, can we talk about his strike comments for a moment? Spohr is optimistic that the strikes won’t go on, because Lufthansa internally allocates the cost of a strike to a particular labor group. Is that the emptiest threat on earth, or what am I not understanding?
- Management and unions are far apart in terms of what they’re willing to settle for
- Typically after a strike, the two groups get closer together rather than farther apart when it comes to an agreement
- So is Spohr suggesting that after each strike, the total amount of value of the contract is decreasing, to the point that they get less than they would have even gotten before the strike?
- Is there any precedent for that at the airline? With the strikes having cost an estimated $271 million so far, does that mean that $271 million is being deducted from the initial amount being offered? If they keep going on strike, will they eventually have to pay for the privilege of working at Lufthansa?
- Or is this more of an idle threat of “oh, next time we negotiate a contract, we’ll remind you of how much your last strike cost us?”
It’s entirely possible I’m missing something, and if so, please let me know. But otherwise, that comment just reeks of arrogance, and shows that maybe Spohr shouldn’t be leading an airline group if he’s so unable to negotiate with employees.
I feel like maybe his focus should be on finding common ground with the unions and labor groups, rather than basically saying “meh, they’ll stop eventually, because we’re taking the money out of their pockets to pay for these strikes.” What’s sad is that Spohr is a former Lufthansa pilot, so you’d think he’d be better at labor relations…
Bottom line
Lufthansa’s CEO doesn’t seem very bothered by the current strikes, since he’s suggesting that the money lost from the strikes is coming out of the pockets of employees, and therefore he thinks they’ll end soon. To me that sounds like a totally empty threat — after all, that would suggest that the offer gets worse with each strike, rather than the two parties being closer to an agreement. But it’s possible I’m missing something.
What do you make of Spohr’s comments about the strike?
The way some people comment about workers and will on employers to treat them like crap is something truly awful to behold. You just know that if they were treated that way they would be crying like nobody else about how it is unfair *they* got treated that way personally, even as they frequently cheered on others being exploited.
@AJB there is just one problem with your statement and that is that you only see the €500,000,000 Lufthansa paid out in profit sharing to its employees in 2023, what you don’t see is the proportional amount that reached the ground staff which are the ones currently on strike. The large amounts paid out to share holders and senior management is one thing, but the employees already earning minimum wage the ones that waived increases...
@AJB there is just one problem with your statement and that is that you only see the €500,000,000 Lufthansa paid out in profit sharing to its employees in 2023, what you don’t see is the proportional amount that reached the ground staff which are the ones currently on strike. The large amounts paid out to share holders and senior management is one thing, but the employees already earning minimum wage the ones that waived increases and bonuses during the pandemic time to save the company, working under extreme circumstances the two years after the pandemic due to severe lack of staff suddenly counts for nothing?
That guy is so weird, it hurts!
He's not just the most corrupt CEO of any EU airline, he, as a former pilot at the airline should know what it all means to fly all over and be a "servant" to this airline Group, but it sure seems he has forgotten all of the basics on what's going on behind closed curtains at an airline.
I'm not surprised, he is acting like a...
That guy is so weird, it hurts!
He's not just the most corrupt CEO of any EU airline, he, as a former pilot at the airline should know what it all means to fly all over and be a "servant" to this airline Group, but it sure seems he has forgotten all of the basics on what's going on behind closed curtains at an airline.
I'm not surprised, he is acting like a drunk guy, his entire family (brother, brother in law and and and) are in higher positions at the Lufthansa-Group. No need to ask, if they are all REALLY qualified for the positions they are in!? ;-)
Corruptness at the highest level.
I still can NOT understand, why US Americans and Israelis as well as Indians still love that airline-Group so much, being treated as they are?
Mr. Spohr seems… innocent.
His airline is alienating. his paying passengers by not flying during strikes.
It is alienating its biggest investment, trained and motivated staff.
I fly the competition because the seats in Y and J are very uncomfortable, and the food is gently described as life prolonging. The precipitation cost of meals has got to be very cheap.
Agreed with other posters that the cost allocation bit probably refers to the profit sharing calculation.
I do think it’s good that he points out the fact that strikes can foreseeably bite employees in the rear. LH used to be the one european airline that you didn’t have to worry about striking. Pax won’t forget if their trip is ruined by a strike. It’s erroneous for employees to think that strikes can’t have negative...
Agreed with other posters that the cost allocation bit probably refers to the profit sharing calculation.
I do think it’s good that he points out the fact that strikes can foreseeably bite employees in the rear. LH used to be the one european airline that you didn’t have to worry about striking. Pax won’t forget if their trip is ruined by a strike. It’s erroneous for employees to think that strikes can’t have negative consequences to them, even though unions will never admit that.
he is threatening that new aircraft and routes will go to (INSERT HIS NEW SUBSIDIARY) operating ex-LH route basically
First, I think that there is a cultural element here that you are overlooking. Unions have had mandated representation on German corporate boards for decades. So it's just not "the workers vs. the stock-option bosses," in every major German company. The workers are recognized as stakeholders, just like the customers, suppliers and shareholders are.
Second, because airlines have multiple unions, it makes perfect sense for all of them to recognize that they're splitting the same...
First, I think that there is a cultural element here that you are overlooking. Unions have had mandated representation on German corporate boards for decades. So it's just not "the workers vs. the stock-option bosses," in every major German company. The workers are recognized as stakeholders, just like the customers, suppliers and shareholders are.
Second, because airlines have multiple unions, it makes perfect sense for all of them to recognize that they're splitting the same pie. Even in the US, we sometimes see pilots mixing it up with flight attendants, mechanics, etc. All he is doing is publicly stating that obvious truth.
Germany has created an export-driven economic powerhouse where an entire generation of blue-collar workers has earned $35 an hour or more. Switzerland is the same way. They just don't believe in dog-eat-dog, and this interview reflects that.
Great idea, I have no time for strikers that do it for money and can only do it as it impacts others. If they arent happy, leave.
that's not how it works in Germany. Also you normal can't fire someone if he works for years for the company
If they leave, those flights will get cancelled anyway. They are giving the company a chance to fix the relationship, no matter how much is Carsten trying to destroy it.
A brilliant negotiating tactic by Spohr to deduct the overall costs of the strike from the final negotiated settlement with the union. He is confident because he knows the union realizes this and will eventually come in line or it will cost the union membership dearly. The longer the strikes continue, the less the membership will receive. Remember, Lufthansa paid out over €500,000,000 in profit sharing to its employees in 2023 which is a significant...
A brilliant negotiating tactic by Spohr to deduct the overall costs of the strike from the final negotiated settlement with the union. He is confident because he knows the union realizes this and will eventually come in line or it will cost the union membership dearly. The longer the strikes continue, the less the membership will receive. Remember, Lufthansa paid out over €500,000,000 in profit sharing to its employees in 2023 which is a significant amount, but seemingly already forgotten…
Lufthansa has 109,000 employees... assuming equal payouts of the profit sharing, this is under €5000 per head. That is NOT a "significant number" with high inflation.
And we definitely did not receive anything close to 5000€.
I wish!!!
I interpreted that the comment is more about the profit-sharing calculation. If the strike costs $xx, this would be allocated as a cost to the striking unit, reducing the profit-sharing payment to the strikers instead of reducing all employee profit-sharing. So, theoretically, higher wages won from the strike would be offset by the lower profit-sharing, and maybe some workers decide it wasn't worth it. Or something.
Appalling airline. Can't wait for the day it collapses.
That would be the best thing to ever happen to customers in central Europe. Now that I think about it, I actually like Carsten as the CEO!
All he does is buy other airlines and start newer low cost ones than fixing the main airline issues at Lufthansa lol
It's all palace intrigue. Next topic?
The first two commenters understood what Ben apparently did not.
While I'd question him saying that in public during negotiations, it's hardly "bizarre", but remove "bizarre" from the headline and nobody clicks!
I think it's actually very fair and pretty clear: he's basically saying "The last strike of flight attendants cost us X euros. We wanted to give you a new contract in the sum of Y. However, now we need to substract X from the amount we wanted to give you. Therefore, the new budget is Y-X."
Very honest, very clear and very fair and I am not saying it ironically - strikes shouldn't impact customers,...
I think it's actually very fair and pretty clear: he's basically saying "The last strike of flight attendants cost us X euros. We wanted to give you a new contract in the sum of Y. However, now we need to substract X from the amount we wanted to give you. Therefore, the new budget is Y-X."
Very honest, very clear and very fair and I am not saying it ironically - strikes shouldn't impact customers, ever and I am all for crossing the picket lines when I am being inconvenienced as a customer.
Except it's not going to work. If you offer even less to your employees, they will strike even more. Carsten lives in the past, he still thinks that employees are his slaves who have no where to go. That's not the case in the job current market. There is a massive shortage of pilots and all kinds of other labour. Employees don't need Lufthansa, they will be fine without it. But Lufthansa won't be fine...
Except it's not going to work. If you offer even less to your employees, they will strike even more. Carsten lives in the past, he still thinks that employees are his slaves who have no where to go. That's not the case in the job current market. There is a massive shortage of pilots and all kinds of other labour. Employees don't need Lufthansa, they will be fine without it. But Lufthansa won't be fine unless they strike a deal with employees, which can only happen if they give them a fair offer, reflecting the record profits these employees achieved last year.
Carsten's comments are really just him being desperate because shareholders are starting to see the damage he's doing to the company. They already fired the entire board except himself, and his time may be about to come too.
Maintaining good relationships with employees and making sure the workforce actually works is among the top responsibilities of the management. If you can't do it, you're not fit for the job.
Of pilots? Yes. Flight attendants? Not so much. Let's be honest it's not THAT hard of a job - and I should know, have done it for 3 years before switching positions.
Leaving that aside - Carsten has not been a good CEO and everybody understands it. In that case, however, he has a valid point.
There is also a shortage of cashiers at supermarkets. It's not about how hard or easy the job is. There simply isn't enough workforce to cover all these low paid jobs. Cabin crews are part of the pool - if they get a better deal elsewhere, nothing forces them to keep flying.
If Carsten's point was valid, he wouldn't have to make it, he'd simply do what he's threatening to do.
"...strikes shouldn't impact customers..."
Someone is missing the point of strikes.
Basically, he is threatening that new aircraft and routes will go to SWISS or Austrian if Lufthansa's labor costs (incl. any costs due to strikes) get to high. This might, in the worst case, result in lay-offs at Lufthansa while other group airlines will be growing.
Austrian is de facto striking too (with the employee meetings). Brussels is also going on strike. SWISS is the only airline in the Carsten's empire that operates somewhat normally. Not only it doesn't make him look like a very good manager, it limits his options to move capacity elsewhere. Sure, they're gonna move everything to ZRH which has much higher cost base than anything FRA and MUC unions could even imagine asking for.
The main limitation of Zurich is the slot allocation. There are no slots available, which make sense for network operation.
Labor cost is actually lower in Switzerland, than in Germany, despite higher salaries. Stihl, the chain saw company, is moving some of their operation to Switzerland for that reason.
he is threatening that new aircraft and routes will go to (INSERT HIS NEW SUBSIDRY)
As I see Spohrs comments it is more in line with something like:
For future investments we will include the cost and likelihood of strikes into our equation, that means if you flight attendants in Germany keep going on strike, we will strengthen other hubs like Zurich, and this will leave you with less money in the long term, as our best performing hubs will also get the best pay rises. And if Frankfurt and...
As I see Spohrs comments it is more in line with something like:
For future investments we will include the cost and likelihood of strikes into our equation, that means if you flight attendants in Germany keep going on strike, we will strengthen other hubs like Zurich, and this will leave you with less money in the long term, as our best performing hubs will also get the best pay rises. And if Frankfurt and Munich are not as profitable they will keep getting less fortunate contracts.