Strike looms for Lufthansa as wage talks fail

German airline Lufthansa, already battling strong headwinds from soaring kerosene prices and competition, was left facing potentially costly strikes Tuesday after wage talks with cabin crew crashed. Unions have held off from taking strike action while last-ditch wage negotiations were still underway, but with no breakthrough in the deadlocked talks overnight, the UFO labour union declared the negotiations as failed and called for immediate walkouts. UFO chief Nicoley Baublies, speaking at a news conference, said there were no concrete details as yet when the walkouts would begin, but temporary, warning strikes could be staged at any time. "In the medium term, we're preparing for an open-ended strike," he said. UFO's chief negotiator Dirk Vogelsang later specified that there would be no immediate industrial action. Lufthansa shares were the biggest losers on the Frankfurt stock exchange on Tuesday, shedding 2.5 percent to 9.67 euros in an only slightly softer market. At a separate news conference, the head of Lufthansa's passenger business Peter Gerber warned that an all-out strike could cost the airline millions of euros (dollars) a day. An earlier strike by cabin crew at the beginning of 2009 cost Lufthansa several tens of millions of euros. It is not the first time this year that Lufthansa has felt the pinch from industrial action. In February, the apron control staff at Frankfurt airport, Lufthansa's main hub, walked off the job over demands for higher pay. Walkouts at the current time, the end of the crucial summer holiday period, could prove particularly painful for an airline. Nevertheless, management appear to be willing to risk all-out confrontation. Lufthansa embarked on a cost-cutting programme at the beginning of the year with the aim of boosting its operating profit by 1.5 billion euros ($1.9 billion) by 2014. The union is seeking a 5.0-percent pay increase for cabin staff for 15 months starting from January this year after three years of zero increases. It is also opposed to the use of temporary cabin staff in Lufthansa aircraft. Lufthansa's latest offer was for a pay increase of "around 3.5 percent," said Peter Gerber. The two sides had, nevertheless, been moving closer on a number of key issues, the UFO labour union said in a statement. However, the talks finally failed because management had categorically refused to rule out farming out some jobs. Cabin staff are concerned about Lufthansa's decision to use temporary crew members on flights to and from Berlin, which they fear is a first step to creating a regional subsidiary closer to the low-cost models of airlines such as Ryanair and EasyJet.