Lufthansa prepares new airline

Frankfurt The youngest member of the Lufthansa Group already has a name and its own website. The new airline will be called City Airlines. “Member of Lufthansa Group” is on the website.

It is still unclear when the new airline will take off. That depends on the negotiations between the pilot association Vereinigung Cockpit (VC) and the management. Both sides have been talking for months about how and under what conditions the Lufthansa core brand can grow.

If no agreement is reached by the end of June, Lufthansa will lose the feeder flights (feeds) to Frankfurt and Munich to City Airlines with lower labor costs. That could happen very quickly, according to the company headquarters. Flight operations are largely prepared, the jets and staff are still missing.

Should City Airlines take off, the consequences for passengers would be manageable. Tickets are still booked through Lufthansa, the jets come from Lufthansa and keep their “outfit” inside and out. The crews should also embody the Lufthansa identity.

So why all the effort? City Airlines – the name is closely based on the existing Cityline, which also operates flights for Lufthansa – is the latest example of the strategy of the group management around CEO Carsten Spohr. By setting up new airlines with different collective agreements, the management wants to get the unions to make concessions and a common plan for the future.

City Airlines and Lufthansa: Complexity continues to increase

The price for this is increasing complexity in flight operations. City Airlines would be the group’s twelfth airline brand. The number 13 could soon follow with the Italian ITA. Controlling this diversity is not easy. CEO Spohr knows that. Neither side can really want City Airlines to take off, he said recently at an internal staff meeting.

But when in doubt, the highest Lufthansa seat accepts the complexity. “If we fail, a second Cityline will become so large that this will further reduce the proportion of the feed that Lufthansa operates itself,” Spohr sent a clear message to the VC representatives at the beginning of March.

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City Airlines is to ensure that feeder services to the major hubs in Frankfurt and Munich are competitive. So far, these have largely been carried out by crews from the Lufthansa core brand. The so-called group collective agreement applies here, which offers the best conditions within the group.

At City Airlines, the cockpit crew would also be paid according to the tariff, but the less lavish Cityline contract should apply here. Management wants the new airline to be seen primarily as an opportunity for growth in the large network of feeder flights.

Cityline itself, on the other hand, cannot take over all of the feeder flights, since a size limit is stipulated in collective agreements with the VC. Should the negotiations with VC fail, Cityline would even have to shrink. Because then earlier collective agreements would become valid again. They stipulate that only regional jets may be operated under Cityline, no short-haul aircraft as is currently the case.

City Airlines could start operations quickly. At least one aircraft is still missing for the so-called AOC (Air Operator Certificate), the operating license from the Federal Aviation Office. Lufthansa could push that over to the new airline quite quickly. In corporate circles it can be heard that City Airlines could then grow quite quickly to up to 40 jets. The airline will initially start in Munich.

Lufthansa boss Carsten Spohr

The management of Europe’s largest airline group is demanding concessions from the pilots of the core brand in order to make feeder traffic competitive.

(Photo: IMAGO/sepp spiegl)

Recruitment is scheduled to begin in the summer. “Would you like to be part of a lively and dynamic team? Then we can take off together…”, the young company advertises on the website for potential crew members. There are no problems in finding enough pilots at the group headquarters. It is said that a large number of applications have recently been received for vacant cockpit positions at the subsidiary Brussels Airlines.

The Lufthansa management points out that their actions are not unusual. Other airline groups would now have the feeder services carried out by subsidiaries, such as Singapore Airlines or Cathay Pacific. The major airlines in the USA also use this model, with American Airlines, American Eagle takes on the “feeder service”.

Nevertheless, management and the pilot representatives hope to find a solution that will make City Airlines unnecessary. This Friday, the two collective bargaining partners leave the “closed room”. It was agreed last year to discuss issues that are not part of a collective agreement and can therefore be struck in peace and without publicity. Normal collective bargaining will now continue until the end of June.

Many pilots distrust management’s promises

The main issue here is the so-called Perspective Agreement (PPV). Some time ago, the collective bargaining partners used it to determine the minimum size of the core brand. The fleet should have 325 aircraft. However, in the course of the pandemic, the management had canceled this agreement, which Spohr himself later described as hasty. Now the group leader wants to achieve a new PPV.

Both sides emphasize that the thread of the conversation has not broken. The group management does not want the work on City Airlines to be understood as an escalation. The tariff partner was always told openly that the planned new airline would not be given up completely because of the ongoing talks. The promise not to make City Airlines fully operational during the negotiations will continue to be kept.

The pilot representatives want a growth perspective for the core brand. Many pilots are distrustful of management’s commitments after the cancellation of the PPV. The decision to start a new long-haul airline with Eurowings Discover in the middle of the crisis had increased tensions. The offshoot flies on routes that Lufthansa previously controlled – and with equipment that was previously managed by Lufthansa.

In the meantime, the mood is said to have improved at least somewhat, as can be heard in cockpit circles. One or the other pilot is said to describe the Eurowings Discover as a “member of the family”. In addition, the alternative – should the talks fail – is not very attractive for the cockpit crews. The core Lufthansa brand would become a purely long-haul airline – with well-paid pilot contracts but limited career opportunities. Whether that will be enough to cut through the big knot in the negotiations, nobody knows at the moment.

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