TBM Staff - Mumbai
Lufthansa aims to revive its core airline by 2026, as it struggles with higher costs, stiff competition, and delays in Boeing plane deliveries. Carsten Spohr, CEO referred to the airline as the group’s “problem child” and emphasised the need for a turnaround to ensure the wider company’s success. The airline has faced challenges, including the cancellation of its Frankfurt to Beijing flights due to increased capacity from Chinese carriers.
The airline has been particularly affected by delays in receiving 41 new Boeing planes, including the 777x jets, which have been years behind schedule. This has forced Lufthansa to continue using older Airbus planes it had planned to retire, impacting profitability on key routes due to their higher fuel consumption. Spohr highlighted that the delays have disproportionately hurt Lufthansa’s ability to modernise its fleet and improve efficiency.
Lufthansa’s difficulties are compounded by rising wage costs, competitive pricing pressures, and a tough aviation market, leading to two profit warnings this year. Investors are watching closely as the company’s third-quarter results approach. The airline’s shares have dropped by 10% in the past six months, raising concerns about its financial stability.
To address these challenges, Lufthansa is considering further international growth, including expanding its stake in Italian carrier ITA Airways. The company also hopes to explore new markets in Latin America and Africa, where it may face less competition. New hubs in regions with lower operating costs, such as Italy, are being considered as part of its strategy to strengthen revenues and improve margins.
