Aviation company faces complaints over ticket price hikes. - Driven by escalating strike expenses, Lufthansa commences austerity measures.
Following expensive strikes at the beginning of this year, Lufthansa is embarking on a budget-saving journey. Although there's a high demand for flights during the summer, CEO Carsten Spohr announced on Tuesday that fewer new employees will be recruited for the administration of the main Lufthansa brand than initially intended. Spohr stated at a presentation of the first-quarter figures this year in Frankfurt that cuts must be made in areas that do not impact the customers directly.
In theory, the company plans to operate with 20% fewer management and administrative staff compared to 2019. The high strike costs must also be covered through increased efficiency.
Despite the shortage and high cost of tickets for Group companies like Swiss, Austrian, Eurowings, and Lufthansa during the summer, Spohr doesn't anticipate any further price hikes, but rather a leveling off of prices. He remains optimistic: "It's going to be another very strong travel summer." Bookings for the warm part of the year are 16% higher than in 2023, indicating "robust growth." The new "Allegris" cabin interior to be unveiled on the first long-haul aircraft on May 1 could also contribute to this.
However, Spohr has rejected the possibility of a 2024 operating profit at the previous year's level for the Lufthansa Group. After being compelled to cut its profit target in half a billion euros in mid-April because of the ongoing strikes and a downturn in air freight, the adjusted operating result (adjusted EBIT) is only predicted to reach €2.2 billion this year instead of around €2.7 billion in 2023. The operating loss tripled to €849 million in the first quarter compared to the same period in the previous year.
The fact that the Group will only be able to cover 92% of its capacity from its pre-coronavirus peak year 2019, due to strike cancellations, faltering aircraft deliveries, and more cautious planning for capacity in the entire year, contributed to the revised profit forecast. Spohr had previously aimed for 94% for the full year.
Spohr: "There will be wage peace for the next few years"
The company estimated the cost of various strikes at around €450 million. €350 million of this total was incurred in the first quarter, when Lufthansa's own ground staff and cabin crews, as well as security staff at various airports, went on strike.
On Tuesday, Spohr described a new wage agreement with Eurowings pilots, lasting until the end of 2026, as being reached without any strikes. Contracts have been signed for a majority of the employees now. "There will be collective bargaining peace for the next few years," Spohr said confidently. The Vereinigung Cockpit pilots' union confirmed the agreement on a key points paper.
Spohr criticized the European Commission for imposing conditions that would make the necessary consolidation of European aviation more difficult. This refers to the German MDax group's proposed acquisition of the Italian state airline Ita, on which the EU Commission now wants to make a decision by June 13 after extending the deadline.
The Lufthansa Group still has until May 6 to dispel concerns about competition with commercial concessions. The authority worries that the Lufthansa Group may acquire a dominant position on specific routes and airports. Spohr made it clear that there's no "Plan B" for his company regarding the Ita takeover if the European Commission rejects it. The goal is to provide a better offer for Italian customers on long-haul and short-haul routes. "But it must be worthwhile for us."
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Source: www.stern.de
