Source: American Shipper; Splash247
Date: 1st September 2022
Freight delays are expected to be short-lived but labor uncertainty remains.
A one-day strike scheduled for Friday by pilots at Lufthansa Airlines will also affect the company’s freighter subsidiary and inconvenience businesses with goods scheduled for carriage. The more serious threat for shippers and Lufthansa Cargo is future labor action of longer duration that could disrupt supply chains.
The German-flag carrier said it has canceled 800 flights at its Frankfurt and Munich hubs for Friday, and a handful of flights on Thursday, after the pilots’ union declared a 24-hour strike over a pay dispute. The stoppage comes as many people in Europe are returning home from the end of the summer holidays.
“Lufthansa is working with joint forces to return its flight operations to normal status as quickly as possible. Nevertheless, the effects of the strike may still lead to individual flight cancellations or delays this Saturday and Sunday,” the airline said in a news release.
Vereinigung Cockpit (VC), the association of airline pilots and flight engineers in Germany, represents the interests of about 9,600 cockpit crew members from all German airlines, including 5,000 at Lufthansa and Lufthansa Cargo. The pilots, who are seeking a wage increase this year with annual inflation adjustments, last week rejected an offer from Lufthansa’s management after previously voting to authorize a strike.
The sides remain far apart on a new collective bargaining agreement. “Lufthansa is available at any time to continue the talks,” a spokesperson said.
It’s unclear exactly how many pilots will participate in the strike action, but most freighter and passenger aircraft are expected to be grounded on Friday. Lufthansa Cargo said it is automatically rebooking freight shipments on the next available flights.
A one-day work stoppage will be manageable for Lufthansa (DXE: LHA) and freight customers, but supply chain problems will become more serious if VC opts to strike again for an extended period, according to air cargo professionals.
Lufthansa Cargo ranks among the 15 largest air cargo carriers in the world based on volume. It achieved a record operating income of $480 million in the second quarter. In addition to managing cargo shipments transported by Lufthansa and sister airlines’ passenger aircraft.
The strike is taking place during a period of tight capacity for air cargo. Passenger fleets are still smaller than their pre-pandemic size and tit-for-tat sanctions related to Russia’s invasion of Ukraine removed about two dozen large freighters from the market while reducing efficiency on flights to Asia because Russia closed its airspace.
Should the Lufthansa pilots go on strike, that would have quite a big impact on capacity.
Good planning and capacity management by all parties in the air logistics sector will avoid any serious impact on cargo flows during a short strike, said the director general of The International Air Cargo Association.
“Partner carriers and other [options] will be able to support some of the impacts, but the key will be customer and carrier communication to prioritize shipments in the system, coupled with flexible and agile disruption management solutions. The key objective will be to reduce the impact on customers as much as possible,” he said.
With relatively easy cross-border trucking in Europe, other carriers such as Air France/KLM, Iberia and Cargolux potentially could absorb some Lufthansa cargo diverted to Amsterdam, Paris, Luxembourg or Madrid. Trans-Atlantic capacity is better than to Asia because airlines have restored many routes to meet strong summer flying demand.
A lengthy strike could also impact joint ventures Lufthansa Cargo has with All Nippon Airways, Cathay Pacific and United Airlines (NASDAQ: UAL).