Aug. 28, 2012 at 12:04 PM ET
Wage talks between Germany's largest airline Lufthansa and a labor union representing the airline’s cabin crews have collapsed and will result in strikes, union officials said Tuesday.
The strikes could cause hundreds of flight cancellations affecting thousands of passengers.
Back in April, the UFO union demanded a 5 percent wage increase for about 18,000 Lufthansa flight attendants, a profit-related bonus and a guarantee that the German airline will not outsource jobs.
A new round of strikes would be the second this year affecting Frankfurt International Airport and Lufthansa.
Frankfurt Airport officials told NBC News that an air traffic controller strike in February – when approximately 1,700 flights were cancelled – cost Europe’s third-largest hub and home base to Lufthansa nearly $5 million.
Costs of a drawn-out stoppage could quickly mount for the airline, which said in 2010 a four-day strike by pilots would cost it 25 million euros ($31.3 million) a day in lost revenue.
"The cost could reach millions on a day with a lot of traffic," Lufthansa board member for passengers business Peter Gerber told reporters on Tuesday.
Gerber said Lufthansa had offered a package equating to a pay raise of about 3.5 percent.
"Given the difficult competitive environment we demand all staff to make their contribution," he said, pointing to the need to slow down pay rises and extend working hours.
He said Lufthansa was prepared to stop hiring temporary workers but not indefinitely as demanded by UFO.
The union -- which wants the 5 percent pay rise for its members after a three-year pay freeze - last week called on members to start preparing for a strike so it could take action as swiftly as possible.
Negotiations between the union and Lufthansa, Germany's leading airline, to end a 13-month pay dispute broke down late on Monday.
Lufthansa, which typically operates around 1,850 flights a day, said it still wanted to negotiate a deal with the union, which has also called for a better profit-sharing scheme and guarantees that jobs will not be outsourced or given to temporary workers.
It said it would give details of its contingency plans only when the union gave strike times, and would do everything possible to minimize disruption.
The move comes as Lufthansa cuts 3,500 jobs - about 3 percent of its global workforce of 117,000 - and freezes investment, aiming to boost earnings which had been squeezed by soaring fuel prices and competition from low-cost and Middle East carriers.
Lufthansa has also shifted the contracts of pilots and flight attendants at carrier Austrian Airlines to a lower-cost subsidiary and has boosted cooperation between its main Lufthansa brand and low-cost carrier Germanwings.
While UFO has said that any airline paying a dividend does not need such drastic cuts, Lufthansa executives last week defended the savings plan, saying the airline needed to take action to maintain its position in Europe.
Lufthansa shares were down 1.5 percent in midday trading.
Andy Eckardt of NBC News and Reuters contributed to this report.
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