Lufthansa halts 360 flights as pilots strike

Deutsche Lufthansa AG, Europe’s second-largest airline, said it’s grounding about 360 flights today as pilots at the CityLine regional unit strike over pay.

All airports in Germany served by the division are affected by the cancellations of domestic and regional European flights, Claudia Lange, a spokeswoman for Lufthansa in Frankfurt, said in an interview. Long-haul flights are operating normally.

The Vereinigung Cockpit pilots union began the 36-hour walkout at midnight German time. CityLine operates 50- to 93-seat aircraft, which connect passengers to Cologne, Germany-based Lufthansa’s mainline service. The carrier said it didn’t have information on cancellations tomorrow.

The union has rejected Lufthansa’s offer to increase CityLine pilots’ wages by 5.5 per cent in two steps and pay bonuses of ¤7,000 ($10,800) for captains and ¤5,000 for co-pilots. Cockpit wants the CityLine pilots’ pay to match their counterparts’ wages at Lufthansa’s main service.

Lufthansa fell as much as 44 cents, or 2.8 per cent to 15.19 euros as of 1:09 pm in Frankfurt trading, valuing the company at ¤6.96 billion. The decline brought the stock’s drop this year to 17 per cent.

The strike extends a period of labour turmoil at the airline as the aviation industry grapples with kerosene costs that have more than doubled over this past year.

Baggage-Handler Contract: Lufthansa ended a five-day walkout by baggage handlers, mechanics and flight attendants on August. 1 after agreeing to a 7.4 per cent, two-step pay raise.

Such pay deals may force European Central Bank President Jean-Claude Trichet to keep interest rates at a seven-year high for longer, or even raise them again after an increase in July, to contain inflation.

Rising fuel prices have contributed to least 24 airlines seeking bankruptcy protection or halting flights in the first half of 2008, according to the IATA, which is forecasting a loss of as much as $6.1 billion for the global aviation industry this year.

Pilots at CityLine, along with colleagues at Lufthansa’s Eurowings affiliate, also staged a 36-hour walkout that ended on July 23. That strike caused Lufthansa, which operates about 2,000 daily flights, to cancel almost 1,000 flights. The union held a 24-hour strike on July 7 that forced Lufthansa to ground more than 640 flights.

Chris Reiter in Berlin at creiter2@bloomberg.net