Bogged down in labor conflicts for several weeks, Lufthansa could find itself at a disadvantage in the race against Air France-KLM for the acquisition of TAP Air Portugal.

Indeed, AlphaValue reports this morning that the Portuguese Civil Aviation Pilots Union (SPAC) has raised concerns over "union repression" at the German carrier, following Lufthansa's unilateral decision to terminate a key agreement with the German pilots' union, Vereinigung Cockpit (VC).

As a reminder, in early April, the German pilots' union announced that Lufthansa had terminated, with immediate effect and without notice, an agreement in place since 2018, triggering a reaction from the International Federation of Air Line Pilots' Associations (IFALPA).

This agreement allowed pilots to be partially seconded from their duties to contribute to flight safety work within the union, a common practice in the aviation sector, according to the union.

"SPAC has officially warned the Portuguese government that Lufthansa's confrontational labor relations tactics make it a questionable investor for the privatization of TAP Air Portugal," reports Yi Zhong, the analyst covering the stock at AlphaValue.

The specialist adds that the labor tensions at Lufthansa (eight days of strikes since the beginning of the year) and its inclination to treat Lisbon as a mere supplement to its existing hub network contrast sharply with Air France-KLM's strategy. The latter aims to establish Lisbon as its exclusive hub for Southern Europe through a more collaborative approach to state and union partnerships.

Furthermore, a strike by Lufthansa pilots is still ongoing for a fifth consecutive day this Friday. On Wednesday, the VC noted "with regret" that "Lufthansa and Lufthansa Cargo apparently have no intention of pursuing a fair arbitration process to resolve the current wage disputes."

Despite these turbulent circumstances, Lufthansa shares are up 0.3% in Frankfurt, while Air France-KLM is gaining 0.7% in Paris.