The Group’s core brand, Lufthansa Airlines, lurched into the red in 2024. This is due to multiple strikes at German airports last year, high fees and bureaucratic constraints. A turnaround program is intended to bring the airline back into the profit zone. In contrast, subsidiaries such as Swiss Air Lines, Discover, Lufthansa Cargo, Lufthansa Technik and others contributed high profits to the annual result, compensating their parent company’s losses. At the Annual General Meeting, management proposed a dividend of EUR 0.30 per share.
Carsten Spohr coughed more than he spoke. Apparently, the drastic slump in profits at Lufthansa Airlines took his breath away. In fiscal 2024, the adjusted operating result fell by 39% to EUR 1.65 billion – a decline of more than EUR 1 billion, year on year. Worse still: the core brand, Lufthansa Airlines, which normally makes a significant contribution to the Group result, reports losses of EUR 94 million. Spohr spoke of an “unsatisfactory result”.
Turnaround Program as countermeasure
To get out of the red, Lufthansa Airlines has launched a comprehensive Turnaround Program to improve earnings by EUR 2.5 billion come 2028, the CEO announced. Two thirds of this sum is to be achieved through cost reductions, the rest through higher ticket prices and optimized route planning. Initial progress is already visible, but the year 2025 will still be a transitional period in which the measures will only gradually take effect.
In order to achieve better financial results, Lufthansa Airlines will add 26 passenger aircraft to its fleet in 2025 (among them, 12 widebodies), and it will focus on growth potential outside its German home market. The cost structures there are often more favorable, indicated CFO, Till Streichert. This applies to high-demand intercontinental connections between Europe and the Americas, but also to intra-European routes which are increasingly being taken over by subsidiary airlines or partners such as Air Baltic. Others will be axed completely due to cost reasons, as has already happened with the Leipzig-Munich route, for instance.
Improving market presence
CEO Spohr praised the investment in Rome-headquartered ITA Airways (41%) as a successful move. Due to this step, Lufthansa had become the world’s largest airline group outside of the USA, based on majority shareholdings. Thanks to the ITA network, previously underserved markets such as Brazil and Argentina could be served more effectively and more frequently by the Lufthansa Group airlines. He did not rule out the possibility of Lufthansa upping its stake in ITA to 90% this summer. However, no final decision has yet been made. Currently, experts are putting their heads together to synchronize the Group members’ traffic before resolving expansion issues or deciding fleet growth issues. It also an open question as to whether Lufthansa Cargo will manage ITA’s freight business similar to the Austrian and Brussels Airlines model, or if ITA will do this on its own. “We will examine all possibilities and options to identify interesting cooperations between ITA and the Lufthansa Group. This also includes the cargo business,” states Corporate Communications.
Umbrella brand strategy
In terms of Group affiliation, Spohr announced that this would be visibly displayed on the fuselage of all Group members’ fleets as part of a new umbrella brand strategy, visualized in lounges and printed materials. “50% of all passengers use more than one Lufthansa Group member when traveling, although they are often unaware of our family structure,” said Spohr.
In contrast to the core airline, the CEO was very pleased with the subsidiaries. Swiss Air Lines, Discover, Lufthansa Cargo and Co. achieved the third-best financial result in the Group’s 99-year history, despite the losses incurred by the flagship Lufthansa Airlines. Lufthansa Cargo contributed EUR 251 million to this result (previous year: EUR 219 million), of which EUR 199 million was generated in the fourth quarter, which is traditionally the peak season for airfreight (previous year: EUR 30 million). This development not only confirms the expected normalization in the airfreight market, but is also the result of strict cost management, which enables profitable growth, according to a statement. Lufthansa Cargo benefited in particular from the flourishing e-commerce business from China. Due to higher yields, the airline relocated some of its own B777 freighters from transatlantic routes to Asia/Pacific. “In view of the positive business situation, we could make good use of additional freighters, as the demand for airfreight grows, particularly in uncertain times,” said Spohr, but did not announce any orders for B777F or A350F.
Next stop: Lisbon or Madrid
With regard to the multi-hub strategy and further takeovers, Spohr referred to ongoing talks in Madrid (Air Europa) and Lisbon (TAP Portugal). Both carriers will probably join a larger airline group in order to be able to withstand the pressure from external providers from the Middle East, the Far East or the USA. He did not indicate a preference for either of the two airlines mentioned. However, internal circles point to TAP Portugal as the more desirable partner due to its traditionally dense network to Brazil as well as to some African countries. The ball is now in the Portuguese government’s court. It wants to fully privatize the Portuguese national airline in 2025. If Lufthansa wins the bid, Lisbon’s Humberto Delgado Airport would become the Group’s next intercontinental hub.
