The strikes by large groups of employees ruined Lufthansa’s first quarter. With the expensive tariff peace, attention is now turning to the costs of the upcoming summer flight schedule.
Lufthansa is embarking on austerity measures after the expensive strikes at the beginning of the year. CEO Carsten Spohr announced a hiring freeze in administration despite the strong bookings for the summer. Savings must be made on all issues that do not directly affect the customer, said Spohr when presenting the figures for the first quarter of this year in Frankfurt.
In principle, the company has decided to manage with 20 percent fewer management personnel and employees in the administrative areas compared to 2019. The high strike costs would also have to be recouped through increased productivity.
Tickets from group companies such as Swiss, Austrian, Eurowings and Lufthansa will remain scarce and expensive this summer. However, he doesn’t see any further price increases, but rather a flattening of prices, said Spohr and was convinced: “It will be another very strong travel summer.” Bookings for the warm half of the year are 16 percent higher than in 2023, which promises “highly profitable growth”. It will certainly be another “very, very good year” for the Lufthansa Group. The new “Allegris” cabin equipment, which will be launched in the first long-haul aircraft on May 1st, should also help.
Significantly lower profit expected
However, Spohr has set aside an operating profit at the previous year’s level for 2024. Due to the burden of the continued strikes and poor air freight business, the Lufthansa management was forced to cut its profit target by half a billion euros in mid-April. Instead of around 2.7 billion as in 2023, the adjusted operating result (adjusted EBIT) is only expected to reach 2.2 billion euros in the current year. In the first quarter, which was weak due to seasonal travel, the operating loss tripled compared to the same quarter of the previous year to 849 million euros.
Contributing to the capped profit expectations is the fact that the group can only get 92 percent of its offering from the last pre-Corona year, 2019, into the air for the year as a whole due to the strike cancellations, stalled aircraft deliveries and more cautious capacity planning. Spohr had originally targeted 94 percent for the year as a whole.
Spohr: “There will be collective bargaining peace for the next few years”
The company estimated the burden of the various strikes at around 450 million euros. Of this, 350 million euros were incurred in the first quarter, when, among others, the company’s own ground staff, cabin crews and security staff at many airports went on strike.
Spohr reported on a fresh collective agreement with the pilots of the Eurowings subsidiary by the end of 2026, which was achieved without any strikes. Contracts for the vast majority of employees have now been concluded. “There will be collective bargaining peace for the next few years,” said Spohr confidently. The pilots’ union Cockpit Association confirmed the agreement on a key points paper.
Joining Ita is open
Spohr criticized the European Commission for imposing conditions on the urgently needed consolidation of European aviation. This refers to the planned entry of the German MDax group into the Italian state airline Ita, on which the EU Commission now wants to decide by June 13th after an extension of the deadline.
The Lufthansa Group therefore has until May 6th to allay competition concerns with commercial concessions. The authority fears that the Lufthansa Group will have an overweight position on individual routes and airports. Spohr made it clear that there was no “Plan B” for his company to take over Ita in the event of a negative decision from Brussels. The aim is to create a better offer for Italian customers on long and short routes. “But it has to be worth it for us too.”
Source: Stern
