Lufthansa has announced that it has reach an agreement with Vereinigung Cockpit (VC)  that will finally put pilots under contract with a new labor deal.   This announcement comes on the heels of negotiations that had taken place between LH, VC and an outside mediator in February 2017.

This finally puts to rest a labor squabble that has lasted since 2014 and has cost Lufthansa €500 million and forced passengers to endure 14 strikes.

Though minor details are yet to be worked out, the sides agreed to the following key points:

  • Lufthansa will NOT outsource jobs to pilots who are not covered under the new agreement.   Previously, LH suggested that up to 40 aircraft could be manned by cockpit crew that would be exempt from any labor agreement.
  • Pilots will receive a pay increase of 11.2% retroactive to 2012 and prorated through 2022.  They will also get a one time bonus of 1.8x their monthly salary.
  • Lufthansa has promised to maintain a minimum fleet size of 325 aircraft, thus ensuring opportunities for hiring new pilots to enter Lufthansa’s Pilot Training Program, as well as creating opportunities for advancement of current pilots to move on to flying larger aircraft as their careers develop.   The target of 325 aircraft needs to be reached or maintained by 2022.
  • Lufthansa will be able to recharacterize the pension liabilities currently on it’s balance sheet.   This accounting maneuver will result in an improved balance sheet to the tune of 100s of millions of Euros and be accretive to Lufthansa’s balance sheet for 2017.  Pilots have agreed to convert their pension to a Defined Benefit Plan.

Once the deal is voted on and approved by pilots, it will be in force until May 2022.