Lufthansa reduces thousands of areas in the administration

Insiders have stunned that the Lufthansa Group would like to delete a few thousand positions in the administration because it has to reduce its costs. “This should be announced at Capital Markets Day on Monday,” said two with the considerations of the Reuters news agency.

The exact number has not yet been finally determined, an insider said on Friday. However, there should be a few thousand spots, the person added.

In total, the Lufthansa Group recently counted almost 103,000 employees. The company rejects a comment on the information.

How does this drastic step come about? In contrast to other large European airlines, the airline has not yet reached the capacity and productivity offered in 2019, the year before the Corona crisis. The aim of a return on sales of eight percent for a long time is still in the distance.

Last year, the MDAX group with a margin of 4.4 percent was less profitable than the European Rival IAG (13.8 percent) and Air France KLM (5.1 percent). The Lufthansa Airlines core brand group even lost. That is why the “Turnaround” renovation program was launched a year ago, with more than 700 measures for lower costs and higher revenues.

According to the turnaround plan, the operating result is to be improved by gross 2.5 billion euros a year by 2028, and the intermediate destination for next year is 1.5 billion euros. Two thirds should be achieved by lower costs and more productivity, a third by higher revenues.

Personnel costs play an important role in the cost reductions. But talks with the unions for the pilots, the cabin staff and the soil workers, association cockpit, UFO and Verdi, have so far been unsuccessful in terms of concessions in collective agreements.

The employer side came up with high demands, but was not ready for any consideration such as employment securing, the unions said. There was therefore no formal negotiations. The union said that the approach without considering without consideration was distanced at the end of March. “Since then, there has been radio silence in relation to the turnaround.”

According to several insiders, Lufthansa will expand the smaller flight operations City and Discover Airlines as a lever to increasing productivity. Spohr has explained this several times. They were specially founded to operate feeder and holiday flights cheaper than the premium brand at lower personnel costs. This causes a lot of trouble with the unions VC and UFO, but can be implemented over time via new hires and the corresponding allocation of new aircraft without the tariff partners.

Efficiency in the flight schedule should also be raised by better coordination of Lufthansa Airlines with the daughters Austrian and Brussels Airlines, Swiss and ITA Airways. That was recently announced. Finally, the ongoing fleet modernization is intended to reduce costs due to the lower fuel consumption of new jets. The proceeds should increase due to the new cabin equipment of Allegris and the sale of more additional products on board.

The gymnastics plan is making progress, Spohr and CFO Till Streichert had explained in the past few months. As evidence, you refer to operational stability with more punctual flight operations and fewer flight cancellations.

This helps to reduce the costs of compensation for customers who were skyrocketing 525 million euros last year due to strikes and internal operating problems. A new statement is expected on Monday how many of the 700 efficiency measures are in implementation. Analysts want to experience the financial relief effect – but according to insiders, a specific intermediate amount is not to be expected.