The Lufthansa Group has announced it will not distribute multimillion bonuses to the members of its executive board for the year 2021-2022. Indeed, the German government opposed the previously announced plan, citing that the payout of such bonuses would violate the agreements of the state aid the German group received to face the challenges brought about by the COVID-19 pandemic.

Lufthansa Group supervisory board to deny multimillion bonuses

On Tuesday, the news emerged that the Lufthansa Group supervisory board had approved the payment of multimillion-euro bonuses to six members of the executive board.

The decision drew the ire of the German government, which considered the decision a violation of the $9.5 billion (€9 billion) state rescue package the airline received to deal with the impact of the COVID-19 pandemic. Indeed, the agreement between the German government and the Lufthansa Group included restrictions on monetary bonuses for members of the management.

In 2021 and 2022, the airline was still benefitting from the rescue package, which included a 20% stake acquisition by the German government. In September 2022, the German government completed the sale of the shares for a total of $741 million (€700 million), while the airline group managed to pay back all state aid at the end of 2021.

A government spokesperson stated the payout of the bonuses would violate the terms of the bailouts, as the six executives would receive millions in compensation while the group was still benefitting from public funds.

No retroactive bonuses for 2021

Following the government's adverse reaction to the approval of the payment of the bonuses, Lufthansa's supervisory board has stated it has denied the retroactive payment of the multimillion euros bonuses.

Notably, a group's spokesperson clarified that bonuses for the executive board would not be paid out until at least 2025. Indeed, the airline group referred to bonuses as a long-term plan rather than retroactive compensation. Certainly, the condition for the payout of such bonuses is that the group's steering management will be able to reach the goals set for the period 2022-2025.

Opposition also from inside the airline group

Besides the German government, opposition to the payment of retroactive bonuses has come also from inside the airline group too.

On Tuesday, when the airline announced the payment of the retroactive bonuses, unions reacted negatively, stating that all group's employees should benefit from the strong performance the Lufthansa Group has forecasted for the financial year 2022. Daniel Kassa Mbuambi, a member of the independent flight attendant union UFO, summarised the thoughts of many employees by stating:

"Lufthansa employees gave their all during the pandemic and accepted tough cuts to do their part to save the company"

Consequently, Mbuambi's opinion is that the airline group should recognize the relevant role each employee played in the strong recovery of the group from the tragic crisis induced by the pandemic in the form of bonuses and extra payments, not just the top brass.

What do you think of this story? Let us know by clicking on the comment button below!

Source: Deutsche Welle

• 

  Lufthansa

  IATA/ICAO Code:

  LH/DLH

  Airline Type:

  Full Service Carrier

  Hub(s):

  Frankfurt Airport, Munich Airport

  Year Founded:

  1953

  Alliance:

  Star Alliance

  Airline Group:

  Lufthansa Group

  CEO:

  Carsten Spohr

  Country:

  Germany