Lufthansa ready to cut 4,000 jobs in Germany

The crisis at Lufthansa Airlines, the flagship brand of the German aviation group, is now plastic after the decision to cut 4 thousand jobs by 2030, mostly in Germany, an announcement that came on Capital Market Day meeting with analysts, an event that had not happened since 2019, before the Covid crisis. A decision, that of employment cuts (out of a total of 110,000 employees), which will mainly involve administrative staff, with savings of EUR 300 million, offset by announced higher profitability targets and aiming to increase efficiency through digitalisation and automation. On the stock market, the share initially rose by 2% on the news of the cuts, then fell back, reducing its performance to 0.10% at the end of the session. Since the beginning of the year, the share has gained more than 25 per cent.

Although demand for travel remains resilient and fuel prices have fallen, the carrier is struggling to be profitable, cut costs and grow, with traffic volumes still below pre-Covid levels: in the first half of the year, with revenues up 4% to €8 billion and 30.3 million passengers carried, Lufthansa Airlines reported an operating loss of €307 million, albeit an improvement from the -€427 million in the first half of last year. Austrian Airlines, Brussels and Eurowings also reported losses, while Swiss's results were positive, albeit down. The battleship Lufthansa accounts for 50% of the German group's capacity and 40% of its turnover, so without its recovery the entire company suffers.

So far, one third of the profits come from non-aviation divisions such as Technik's maintenance division, which, in addition to its business with commercial airlines, is launching a new 'Defense' division dedicated to military aircraft, while the cargo division will invest EUR 600 million in the Frankfurt freight hub, with the aim of positioning itself among the top three global players. "We are far behind some of our competitors in terms of financial performance," CEO Carsten Spohr admitted to analysts. In order to catch up, Lufthansa expects an adjusted operating margin of 8-10% from 2028, higher than the previous target of 8%, and an operating profit for 2025 above the EUR 1.6 billion recorded last year. Shareholders will be able to count on dividends between 20 and 40 per cent of the consolidated profit.

Since the Covid crisis, Lufthansa has fewer planes and fewer flights, but has 7% more staff. It is burdened by the complexity of its fleet with six families of wide-body aircraft, including Boeing and Airbus, to which the new Boeing 777X will be added once it has obtained certification. To untangle some of these knots, Lufthansa Airlines is pursuing an ambitious group-wide tournaround programme announced last year and modernising its fleet with 230 more aircraft by 2030, including 100 long-haul aircraft. At the same time, the integration of the different brands from Lufthansa, Swiss, Austrian Airlines, Brussels Airlines and Ita Airways, joined by Eurowings for poit-to-point connections, City Airlines, CitiLine and Air Dolomiti for feeder services to Munich and Frankfurt airports, is coming into full swing.

Meanwhile, Ver.di, the union representing Lufthansa employees, criticised the job cuts, claiming that airport and environmental taxes are also adding to the cost pressure being discussed by the German government. In turn, the pilots' union will decide today whether to strike over pension reform. Group executives have threatened to transfer jobs to cheaper subsidiaries such as City Airlines and Discover, adding that cost management is much easier at its other bases, such as Rome, where Italian airline Ita Airways is based.