Lufthansa Reorganises


DEUTSCHE LUFTHANSA has revealed plans that it hopes will help it recover from several years of poor financial returns and reposition the airline back to its benchmark role in the industry.
In mid-July the German national carrier unveiled an extensive range of measures to help it achieve its goals. The global market for air transport continues to grow, explained Carsten Spohr, Chairman of the Executive Board & CEO of Deutsche Lufthansa AG. But in the dynamic and highly price-sensitive market segments, our current platforms only enable us to exploit the growth potential to a limited extent, in view of their sometimes over-rigid cost structures. That is why we are now seeking to tap new growth areas, by creatively and innovatively refining our products and services in both the airline sector and – especially – related markets. By 2020 we aim to have raised our revenues from our new businesses, our new platforms and our service companies from the present 30% to 40% of our total revenue flow.

The group's present multi-brand system – with its multiple hubs in Frankfurt, Munich, Zurich, Vienna and Brussels – will now be complemented by the new 'WINGS' concept in all of its European home markets. Amalgamating all its European member airlines under the WINGS family, it intends to build upon the success of Germanwings and permit an aligned management of all these operations. The Germanwings fleet will be further increased up to 60 aircraft.

With Eurowings as its starting platform, Lufthansa aims to develop a competitive European air travel product for continental travel. The company says that since the competitive cost structures cannot be achieved with its present fleet of Bombardier CRJs, these will be replaced with Airbus A320s. Eurowings will eventually fly up to 23 A320s, and its services are set to be launched in spring 2015. The first Eurowings base outside Germany will be in Basel, Switzerland.

The Lufthansa Group is also planning a new long-haul platform under the WINGS banner, with studies currently being undertaken to ascertain whether this should be done alone or with a partner: talks are already at an advanced stage with Turkish Airlines for the latter option. The intercontinental platform is expected to operate with a fleet of seven Boeing 767s or A330s during the initial phase, with services likely to start in winter 2015. Lufthansa is considering if it can fly nine of its A340s at substantially lower unit costs, either on new routes or on those currently threatened with closure.

Elsewhere, the company is working to further develop its bilateral partnerships with other carriers. It has recently concluded an agreement with Star Alliance partner Air China for closer collaboration on both the passenger and maintenance fronts. The group is also devoting sizeable resources on growing its various service companies, including Lufthansa Technik and LSG Sky Chefs, the latter is looking at related markets beyond the aviation industry, such as the rail catering sector.

Also, Lufthansa is also planning to invest €500 million in innovations across the group between now and 2020. It wants to become the first 'five-star carrier' in the Western Hemisphere and achieve quality leadership in all its various markets. The board is confident the actions planned will go a long way towards securing Lufthansa Group's continued viability and further success.

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