Lufthansa Group pension deficit reaches €10.2bn

The Lufthansa Group’s defined benefit (DB) pension scheme has seen a 41% increase in liabilities since the end of 2014.


The deficit of the airline’s scheme reached €10.2 billion (£7.4 billion) at 31 March according to the group’s first quarter earnings report.

The organisation has attributed its high pension obligations to falling interest rates, raising the cost of funding retirement benefits for its employees.

As a result of the rate falls, pension liabilities have risen and the DB pension scheme needs more assets to be able to cover projected level of benefits in the future.

Lufthansa aims to reform its pension scheme but has been hit by a number of strikes in the past year.

It has proposed plans to increase the retirement age for pilots from 55 to 60 under the terms of its retirement scheme. The organisation also wants employees to start contributing to its pension scheme.

In October, employees went on strike for 48 hours and again for six days between January and March 2015.

Simone Menne, chief officer finance at Lufthansa, said: “Other groups have already made the necessary structural changes from a cover-oriented to a contributions-orientated pension commitment.

“Here, more urgently than ever, we need sustainably financeable solutions in place of obsolete structures.

“[But] we see positive developments in the result and cash flow. This shows we are on the right course. At the same time, we continue to see great pressure to act.

“The enormous pension burdens are putting considerable pressure on our equity and we cannot accept the continuing increase in fees or the development of our unit costs. 

“Great efforts remain to be made here in order to strengthen the international competitiveness of all business segments of the Lufthansa Group.”

Nick Griggs, head of corporate consulting at Barnett Waddingham, added: “When it comes to spiralling pension scheme deficits, German organisations such as Lufthansa are certainly not alone, UK companies too are facing the increasings costs of DB pension schemes.”