"We have an agreement," Lufthansa human resources chief Stefan Lauer told journalists in Frankfurt on Friday morning. "It's not a deal free of pain."
Lufthansa and trade union Verdi announced they had hammered out a deal after informal talks, but the airline is continuing to operate according to a contingency plan until August 4 that calls for cancelling around 130 flights a day.
At least 30 intercontinental connections will be scrapped and some ten percent of European flights will be grounded on Friday due to the strike that began this week. The airline is directing passengers to its website www.lufthansa.com to check whether their flights have been affected.
"Despite the wage agreement, it will take up to two more weeks before flight service is normalized," because a number of maintenance checks had not been carried out during the strike. said Lufthansa spokesman Peter Schneckenleitner.
Lufthansa employees walked off the job on Monday amid an ongoing wage dispute with the company. The deal announced on Friday would raise wages for 34,000 ground personnel by 5.1 percent from July 2008. A year later paypackets will increase by another 2.3 percent. There will also be a one-time payment to employees.
Verdi had wanted a 9.8 percent pay hike over a year, while Lufthansa offered 6.7 percent over 21 months.
Lauer said the walkouts had cost both the company and its staff heavily. "The fact that we were able to resolve the wage conflict internally sends an important message to our passengers and also to our staff and about Germany as a place to do business," he said.
Lufthansa transports 150,000 people daily on average, and July is one of its busiest months. Lauer said Lufthansa could justify the cost of the deal - estimated at €100 million per year - to its shareholders due to the lengthy period the agreement covers. But he said it was now up to personnel to boost productivity to compensate for the salary hike.
Verdi acknowledged that the agreement fell short of the 9.8-percent pay rise it had been seeking. "In the end we reached an outcome that of course does not meet all of our colleagues' expectations but that Verdi can live with," the union's chief negotiator during the dispute Erhard Ott said.
A trade union expert at the German Institute for Economic Research, Hagen Lesch, said he thought the deal was fair. "If you include the one-off payment, the wage agreement is higher than that in many manufacturing sectors," he told the online service of Der Spiegel newsweekly. "Compared to other service-sector deals, Verdi is in the upper tier with this one."
Lufthansa has a released a healthy profit forecast for this year despite a shaky economy and the skyrocketing cost of fuel.