Lufthansa leader Carsten Spohr justifies cost-cutting measures and endorses fresh airline ventures.
Lufthansa versus Unions: A Struggle for cost-cutting consolidation
Lufthansa's CEO, Carsten Spohr, justifies his cost-saving measures amid union backlash. The introduction of new airlines like Discover and Edelweiss is seen as a "strategic necessity" to expand Lufthansa's footprint with more cost-effective structures. Eurowings with its 100 aircraft outside the hubs of Frankfurt and Munich is a prime example, catering to tourist flights. On the horizon, City Airlines will handle feeder flights to the core cities.
Critics, such as UFO chairman Joachim Vázquez Bürger, label this strategy as "corporate internal destructive competition." Unions like the Cockpit Association for pilots and UFO for cabin crew have been voicing their disapproval of Lufthansa's additional, partly non-unionized airlines for years.
Currently, Lufthansa is a lone money-loser in the group, with the core brand being the exception. Delayed aircraft deliveries and hefty location and personnel costs in Germany are significant contributors to the loss[1][2]. The new government is expected to help slash state costs for air safety and air traffic control. Spohr insists this isn't in the government's best interest, as a diminishing Lufthansa would only cultivate an unfavorable environment.
Pilots Demand Wage negotiations
The Cockpit Association is poised to negotiate wages with Lufthansa's pilots early in May. If talks fail, potential strikes against the struggling core brand could become a reality. Frank Blanken, VC spokesman, warns that if Lufthansa doesn't jumpstart negotiations quickly, the question of retaliation will inevitably arise.
Portraying a Financial Turnaround
Part of Lufthansa's "Turnaround" program includes digitalized ground services, seasonal route adjustments, and aircraft retirement. Approximately 250 administrative positions are being axed to cut labor costs[1][2]. A new collective bargaining agreement is on the table, with increased flexibility being the key selling point[2], but unions remain firm against the competitive nature of the model.
Despite resistance from unions, Lufthansa anticipates the "Turnaround" program to add €2.5 billion to operating profit by 2028[2]. Preliminary indicators suggest operational stability improvements in terms of punctuality and regularity[2]. However, market uncertainties and union resistance remain major challenges.
- Lufthansa's CEO, Carsten Spohr, justifies his cost-cutting measures in the airline industry amid union backlash, seeing the introduction of new airlines like Discover and Edelweiss as a "strategic necessity" for expanding Lufthansa's footprint with more cost-effective structures.
- Critics like UFO chairman Joachim Vázquez Bürger label this strategy as "corporate internal destructive competition," and unions, such as the Cockpit Association for pilots and UFO for cabin crew, have been voicing their disapproval of Lufthansa's additional, partly non-unionized airlines for years.
- The new government is expected to help slash state costs for air safety and air traffic control, which could alleviate hefty location and personnel costs in Germany that are significant contributors to Lufthansa's current losses.
- Pilots Association is poised to negotiate wages with Lufthansa's pilots early in May, and if talks fail, potential strikes against the struggling core brand could become a reality, raising concerns about retaliation if negotiations aren't initiated promptly.
