Strike-hit Lufthansa agrees to inflation-busting pay deal

Will raise pay by upto 4.7% for its cabin crew and ground staff

Lufthansa agreed to an inflation-busting pay settlement with a union representing 33,000 workers, ending a dispute which had threatened to drive travellers towards rival flyers.

While Lufthansa agreed to raise pay by up to 4.7% for cabin crew and ground staff, a possible new round of strikes loomed as pilots' union Cockpit demanded the airline respond to its own 4.6% wage hike proposals by the middle of May.

Lufthansa is in the midst of a restructuring programme, dubbed SCORE, to quadruple operating profit to 2.3 billion euros by 2015 through job cuts, better purchasing and merging its European short haul with discount unit Germanwings.

Lufthansa board member for personnel Stefan Lauer said on Wednesday the wage deal with Verdi was "fair."

"It is important now that we offer our passengers reliable flight schedules free from disruption," Lauer said in a statement.

Verdi virtually grounded Lufthansa on April 22, the second strike in a month, after rejecting a company offer to lift pay by up to 1.2% with no job guarantees.

Analysts estimate that strikes have cost the airline about 15 million euros.

German inflation eased to 1.2% year-on-year in April, slowing more than expected and coming in below the ECB's target of just below 2% for the euro zone as a whole.

The new pay deal will be introduced in August. Verdi secured a pledge from Lufthansa not to force lay-offs until March 2015.

The agreement came a day ahead of Lufthansa's first-quarter results which are expected to show its operating loss narrowing by one fifth, thanks to deep cost cuts.

Last November, Lufthansa agreed to raise wages by 3.95% for 18,000 stewards belonging to a different union.

Cockpit, which has been rebuffed by the airline over a demand for a 5.2% pay rise for 2012/13, is seeking a further rise of 4.6% next year.

The pilots have not been on strike since a widespread stoppage crippled the airline in 2010.