The chief executive of Germany’s Lufthansa Group has described the country’s namesake flag carrier as a “problem child” struggling to compete with leaner, more cost-efficient rivals.
Carsten Spohr told reporters on Monday that the aim was to reposition Lufthansa as the “flagship” of the Group by 2026, although it’s clear that in Spohr’s mind, the plan to improve Lufthansa is heavily reliant on cutting costs.
Spohr said at a media and investor briefing that it is a “clear goal that the Lufthansa airline will once again be our flagship for its 100th birthday in 2026.” High costs at the flag carrier are, however, suppressing profits across the Lufthansa Group.
The Group also includes network carriers Austrian Airlines, Brussels Airlines and SWISS, as well as a number of low-cost carriers, including Eurowings, Discover, Lufthansa City and Lufthansa CityLine.
Spohr believes that these other airlines are operating with much better margins compared to the namesake Lufthansa airline, although the carrier has also been hit by a slew of other problems including the much-delayed introduction of a new Business and First Class product, along with fleet modernisation delays.
The UFO union which represents cabin crew at Lufthansa fears Sophr is setting the scene to deliberately shrink the mainline carrier, transferring responsibilities to newer and cheaper airlines like Eurowings and Lufthansa City.
Their fears aren’t exactly unfounded. Routes have already been taken away from Lufthansa and handed over to cheaper-to-run airlines within the Lufthansa Group, and now Sophr is making investments in foreign carriers like Italy’s ITA Airways. The Group is also eyeing an investment in TAP Air Portugal.
The UFO says veteran cabin crew at Lufthansa who are employed on generous contracts with decent wages have been described by management as “too expensive, too inefficient, too cumbersome.”
A contract dispute is already in the making just months after Lufthansa was hit by crippling strikes from thousands of disgruntled cabin crew and ground staff.
The deals that Lufthansa had to make to get employees back to work hit the Group’s profits, which has resulted in Lufthansa saying that the airline will have to embark on a turnaround program.
In short, expect more industrial strife at Lufthansa and yet more cost-cutting plans from Spohr and his management team.
