Lufthansa, one of Europe's leading carriers, is facing significant challenges as it strives to revitalize its flagship airline by 2026. According to CEO Carsten Spohr, the airline has been dubbed the 'problem child' of the German conglomerate due to escalating expenses, delayed aircraft deliveries, and a challenging aviation landscape.
Challenges and Delays
The airline is grappling with soaring wage expenses and pressure on ticket prices, which have complicated its path to recovery. Additionally, the delayed arrival of new Boeing aircraft, particularly the 777x jets, has exacerbated existing problems. Lufthansa has been operating older Airbus models that it intended to retire before the pandemic, which hampers its ability to expand services on lucrative routes and enhance efficiency.
The 777x jets, initially targeted for entry into service in 2019, are now expected to be delivered in mid-2026 or later. This delay has forced Lufthansa to continue flying 23 aircraft that it had planned to retire, affecting its capacity to improve fuel efficiency and expand services.
Strategic Plans for Revival
To revive its flagship airline, Lufthansa plans to invest in further international expansion. The airline aims to explore new markets, including Latin America and Africa, where it could potentially gain a competitive edge. Establishing new hubs with lower operational costs, such as in Italy, is also seen as a viable opportunity to enhance revenue and improve profit margins.
Lufthansa has already taken steps to strengthen its network by launching Lufthansa City Airlines, which will operate feeder flights into Lufthansas network from Frankfurt and Munich. The new airline will initially serve domestic destinations and Birmingham, with plans to add more routes in the coming months.
Financial Outlook
The challenges faced by Lufthansa are reflected in its financial performance, with the company issuing two profit warnings this year. Investors are concerned about the group's upcoming third-quarter results, set to be released on October 29, as the companys shares have fallen by 10% over the past six months.
Despite these challenges, CEO Carsten Spohr remains committed to turning around the airline by its 100th anniversary in 2026. He emphasized that the recovery of the flagship airline is essential for the overall success of the company.
