FRANKFURT (dpa-AFX) - Faced with soaring jet fuel costs and persistent industrial action, Lufthansa is shuttering its regional subsidiary Cityline. The executive board has decided that 27 older Canadair jets belonging to the carrier, which is currently hit by strikes, will no longer operate scheduled services. This accelerated austerity program will also see the core Lufthansa brand, also affected by strikes, forced to scale back.
The Ufo union views the move as retaliation for the strikes, which coincided with the group's centenary celebrations the previous day and caused hundreds of flight cancellations at German airports again on Thursday. "We are shocked and stunned," stated collective bargaining expert Harry Jaeger. "With its unscrupulous approach, the board is waging war against its own people." Andreas Pinheiro, president of the pilots' union Vereinigung Cockpit, confirmed that strikes at Lufthansa and Cityline would continue on Friday as planned.
Inefficient aircraft grounded
The group cited significantly higher jet fuel prices and the costs incurred by ongoing labor disputes as the reasons for the cuts. Particularly inefficient aircraft are being retired early to reduce the need for spot-market fuel purchases. Lufthansa Group's passenger airlines have hedged approximately 80 percent of their fuel consumption based on crude oil prices, a level described as above average.
The cuts also include six aging long-haul jets from the core Lufthansa brand, which will be retired at the end of October. Each aircraft withdrawal eliminates jobs and career opportunities for pilots. In addition to the final four Airbus A340-600s, two older Boeing 747-400 Jumbos will be grounded over the coming winter. The final phase-out of this aircraft type is scheduled for next year, while younger Boeing 747-8 Jumbos will remain in the fleet.
Streamlining feeder flights
Furthermore, the group intends to optimize feeder flights to its European hubs in the winter flight schedule starting in late October. In addition to Frankfurt and Munich, feeder services also serve Zurich, Brussels, Vienna, and Rome to fill long-haul jets. The group noted that this does not need to happen simultaneously at all six hubs, identifying a potential reduction of five aircraft.
Possible route cancellations
Lufthansa stated that flights previously operated by Cityline would be compensated for within the existing network system. Cancellations of particularly inefficient destinations are possible, as is the reduction of individual frequencies during off-peak times. A new flight schedule is currently being drafted.
CFO Till Streichert described the measures as unavoidable, noting that previously planned cuts were being brought forward. "The current crisis forces us to implement these measures sooner."
Management warnings
Management had repeatedly warned unions that strikes would only deteriorate the cost base of the affected units and jeopardize employee prospects. In an internal interview over the weekend regarding Cityline's situation, HR Director Michael Niggemann said: "We have (...) already announced that we would phase out the Canadair aircraft by the end of this year at the latest and would then soon have to close Cityline's entire flight operations. The strikes increase the pressure and could accelerate this process."
The future of Cityline employees
Lufthansa stated that all employee groups at Cityline have already been offered follow-up employment. However, the Vereinigung Cockpit and Ufo unions deemed the conditions for flight crews inadequate. Lufthansa now intends to enter talks with Cityline's works council partners regarding a reconciliation of interests and a social plan. Ufo had demanded a collective social plan for the approximately 800 flight attendants, citing this as a strike objective. Approximately 500 pilots are also affected.
Lufthansa plans to completely cease flight operations of the Munich-based subsidiary. In addition to the Canadair CRJs, this includes the operation of a few Airbus A319 jets. Lufthansa reported that the aircraft are nearing the end of their technical service life and have relatively high operating costs. The move is expected to reduce further losses at the deficit-making airline.
Airports confirm supply issues
Dutch carrier KLM has also reacted to high fuel prices by cutting 160 flights from its schedule. The German airport association ADV confirmed issues with jet fuel supply. Managing Director Ralph Beisel stated that supply is under increasing pressure in Europe. The primary risk lies less in crude oil availability than in limited refinery and product structures. Around 50 percent of EU jet fuel imports originate from the Gulf region. The ADV is calling for the establishment of robust state monitoring of stocks and consumption./ceb/DP/stw
