Pilots' union calls two-day strike at Lufthansa's Germanwings

By Victoria Bryan and Harro Ten Wolde

BERLIN (Reuters) – A long-running row between Lufthansa (LHAG.DE) management and German pilots union Vereinigung Cockpit (VC) over pay and conditions shows no sign of ending soon after the union called for a two-day strike at the group’s budget airline Germanwings.

The VC pilots staged 10 strikes last year, affecting hundreds of thousands of passengers and wiping up to 200 million euros (148 million pounds) from 2014 operating profit at Lufthansa, which is under pressure to reduce costs to keep up with rivals.

The pilots said late on Tuesday the strike, affecting departures across Germany, would run from 2300 GMT on the night of Wednesday Feb. 11 until 2259 GMT on Friday, Feb. 13.

VC said attempts to reach agreement had failed. “Lufthansa thus demonstrates again that it does not want an agreement and is therefore responsible for more strikes,” said Joerg Handwerg, a spokesman for VC.

Germanwings said it expected to operate over half of the 900 flights normally scheduled for the strike period by using volunteer pilots or by chartering planes from other airlines.

The row between pilots and management concerns early retirement benefits that Lufthansa wants to change for new starters.

The current scheme enables pilots to retire at 55 and still receive a portion of their pay until regular state pension payments kick in. Lufthansa wants to increase the earliest age at which its new pilots can retire to reflect increasing life expectancies and cut costs.

Lufthansa said almost all points of contention for the early retirement scheme had been resolved and that a mediator could have easily resolved the outstanding issues.

Shares in Lufthansa were up 0.5 percent at 1055 GMT, outperforming a 0.2 percent weaker Dax (.GDAXI) blue-chip index.

“The positive side of the story is that Lufthansa is driving a hard bargain for its cost reduction efforts, which might succeed in the long term,” Equinet analyst Joachen Rothenbacher wrote in a note.

The pilots have also requested that management enter mediation talks on plans for the expansion of low-cost flights, which Lufthansa has refused.

The pilots oppose the way in which Lufthansa is pushing through the expansion by using a small business that is not subject to the same collective labour agreements as pilots at its Lufthansa and Germanwings brands.

Like rival Air France-KLM (AIRF.PA), Lufthansa wants to increase low-cost operations to win back market share lost to the likes of Ryanair (RYA.I) and easyJet (EZJ.L), which are expanding in its home market.

(Additional reporting by Peter Maushagen; Editing by Georgina Prodhan and Mark Potter)