Lufthansa has reached a new pay agreement with its 4,400 pilots which includes a wage freeze until March 21, 2006.
The deal with Vereinigung Cockpit, the pilots' union, also includes measures to raise productivity and a new contributory company pension plan, the carrier said.
Lufthansa said the deal, which is due to be finally approved on December 20, will cut its costs by around 6%.
The measures to improve productivity include the addition of two extra flying hours monthly onto regular working time prior to overtime as well as changes within the existing salary scales and more flexibility.
Mr Stefan Lauer, Lufthansa's chief executive aviation services and human resources, who conducted the negotiations, said the pay accord was a clear signal for safeguarding jobs at the Group.
“With this agreement, we have come to a basic understanding on how to shape our future. The length of the agreement and the productivity-raising measures are especially of crucial importance for strengthening our position in each business segment,” he said.
The agreement also covers pilots at Germanwings, the Lufthansa low cost subsidiary, “so as to ensure that the staff costs of cockpit crews in the low-cost sector are in future governed by the specific competitive conditions pertaining in the low-cost segment,” the airline said.
During the long and tough negotiations for this deal Wolfgang Mayrhuber, Lufthansa's chairman and ceo, said delay in reaching agreement was hitting long term plans for the airline and he threatened at one stage to outsource some routes to subsidiaries.