Lufthansa starts new quality and growth offensive
The Lufthansa Group’s quality and growth initiative presented on 9 July 2014 is gathering pace. At today’s Supervisory Board meeting, the Supervisory Board Members were informed by the Executive Board of the implementation progress made so far.
The Lufthansa Group’s Supervisory Board has paved the way for the planned transition to a more economical type of aircraft at Eurowings by approving an order for ten Airbus A320ceo planes for the company. With its fleet of 23 aircraft, Eurowings services domestic German and European routes from airports other than the Frankfurt and Munich hubs on behalf of Germanwings. A further 13 A320s will be transferred from the Group’s total aircraft order volume to Eurowings starting in 2015, in order to make its entire fleet consist of Airbus aircraft. Replacing the current Eurowings fleet of Bombardier CRJ900 regional jets with modern A320ceo aircraft will further increase the Düsseldorf-based airline’s unit cost advantage and will thereby improve its ability to compete with low-cost airlines in Europe.
The Lufthansa Group intends to use its Wings concept to cement its good market position in passenger traffic in its home markets of Germany, Austria, Switzerland and Belgium in the long term, including with point-to-point connections. Business on these routes away from the major hubs is characterised by above-average growth in the leisure travel segment and by stiff competition from the rapidly expanding low-cost airlines.
New long-haul-lowcost concept
The Executive Board also presented its plans for the new cost-efficient offer for long-haul connections as part of the Wings concept to the Supervisory Board. One option for realizing this concept could be a new platform based on the airline Sun Express, which is a fifty-fifty joint venture between Lufthansa and Turkish Airlines. In this respect, talks with the Star Alliance partner are to continue. The idea is for the new platform to complement the Lufthansa Group’s product range with up to seven Airbus A330-300s and to commence operations in autumn 2015 with three aircraft in Munich, Düsseldorf or Cologne. The focus here will be on destinations that promise above-average growth in the leisure travel segment and that round out the Lufthansa Group airlines’ current route networks.
In addition to the founding of this new long-haul airline, other intercontinental traffic approaches will be developed in order to once again profitably fly leisure travel-dominated routes using the Lufthansa brand in the future. To offer this, up to 14 Airbus A340-300s from the long-haul fleet will be fitted with a cabin that is optimised for leisure travel. Commencing with the start of the 2015/2016 winter flight timetable, this A340-300 sub-fleet will fly at a much lower cost while nevertheless offering the high-quality travel experience of a Lufthansa flight, with high service standards and comfort levels. The as many as 14 aircraft will operate without a First Class and with 18 Business Class seats, 19 Premium Economy seats and 261 Economy seats, and will in particular serve new leisure travel destinations or markets from which Lufthansa would otherwise have to withdraw without the introduction of this less expensive offer.
“The combination of our core brands’ focus on quality and the premium sector, and the development of new platforms for the leisure travel sector, which is experiencing dynamic growth but is also price-sensitive, is our way of working towards a successful future for the Lufthansa Group airlines,” said Carsten Spohr, Chairman of the Executive Board and CEO of Deutsche Lufthansa AG.
This would strengthen the successful multi-hub system comprising the key hubs of Frankfurt, Munich, Zurich, Vienna and Brussels, he added. This strategy additionally gave the Company the scope to also grow in sectors of this kind, where the Lufthansa Group’s traditional quality brands were not able to participate in market developments, he said.
More money for Lufthansa Technik
In addition to the growth concept for the Lufthansa Group airlines, the Supervisory Board is approving capital expenditure of €60 million by Lufthansa Technik AG in Frankfurt. The Group’s technical division intends to build a new wheel and brake workshop in Frankfurt’s eastern dock area (Osthafen). The building is expected to commence operations as early as at the start of 2017. These new operations will allow Lufthansa Technik, which is the world’s leading provider of aircraft-related technical services, to also achieve further growth in the important segment of wheel and brake maintenance. In so doing, Lufthansa Technik will safeguard the existing 130 jobs for qualified employees based in Frankfurt and will create the parameters for further growth. The building is to be fitted with cutting-edge building services so as to exceed the requirements of Germany’s Energy Conservation Regulations (EnEV) by 30 per cent.