Lufthansa, pilots clash over arbitration offer

FRANKFURT (Reuters) - Lufthansa and its pilots crossed swords on Thursday over the airline's offer of arbitration talks on pay to head off a planned four-day strike that could cost it tens of millions of euros.

Pilots agreed to arbitration but refused to call off the strike until the terms of mediation were clear.

Lufthansa responded by saying it would not discuss terms until the walkout planned for April 13-16 had been cancelled.

Lufthansa this week proposed arbitration and threatened to claim damages from the pilots' union if it failed to swiftly call off the walkout.

The pilots already staged a day-long strike in February that led to about 2,000 flight cancellations, stranded thousands of travellers around the world and cost Lufthansa about 48 million euros ($64.74 million) in lost revenues.

"As soon as the parties agree on the terms of arbitration proceedings, (pilots' union) Vereinigung Cockpit would see itself in a position to abstain from strikes for the duration of the arbitration proceedings," the union said.

A spokesman for Lufthansa said the union statement on Thursday was not sufficient to bury the hatchet and start talks.

"Abstaining from strikes is a given during arbitration," he said, adding no terms for negotiations would be agreed until the strike was definitely off.

"The threat of strikes alone causes damages in the millions," the spokesman said. Lufthansa had said on Wednesday its bookings had already been affected by the looming walkout.

The row comes amid mounting labour unrest over management attempts to push through cost cuts in an industry still reeling after its worst year in decades, when consumers and companies reined in travel budgets amid the global economic crisis.

Cabin crew at British Airways this week completed their second three-day strike in a month amid unrest over management attempts to push through savings.

Lufthansa aims to cut 1 billion euros at its passenger airlines by 2011 to cope with fierce competition, soaring fuel costs and increasingly price-sensitive customers.

Its pilots have said they would accept a pay freeze to help rein in costs. But at the core of the months-long dispute are concerns that Lufthansa wants to grow foreign units while shrinking its Germany-based operations because crews abroad are paid less.

Lufthansa has offered separate talks on those concerns that could last until the end of the year. The pilots' union has so far not committed to such negotiations.

"We'll have to talk about that with Lufthansa," a spokesman for the union said on Thursday.

Last year, Lufthansa completed a shopping spree that saw it add Brussels Airlines, Austrian Airlines and UK-based BMI to its stable of carriers, while also starting up its own airline in Italy, called Lufthansa Italia.

Shares of Lufthansa were up 2.7 percent at 12.61 euros by 1149 GMT, in line with the STOXX Europe 600 Travel & Leisure index which was up 2.3 percent.