Despite strong ticket demand and record revenues, German airline giant Lufthansa experienced a decline in profits during the summer. In response, the company is launching a comprehensive cost-saving program to reduce expenses and increase profitability. CEO Carsten Spohr aims to boost Lufthansa’s adjusted operating profit (EBIT) by a gross €1.5 billion by 2026, primarily by cutting high operating costs.
Lufthansa Faces Profit Decline Despite Strong Demand
During the summer season, Lufthansa recorded an adjusted operating profit of €1.3 billion, a 9% decrease. In response, CEO Carsten Spohr has decided to expand the company’s cost-saving measures. The airline faces several cost challenges, including high wages, a shortage of new, more efficient aircraft, and rising personnel costs.
Lufthansa issued a profit warning for the second time this year, aligning with analysts’ expectations, and forecasts an adjusted operating profit for the full year between €1.4 and €1.8 billion across the Group.
Struggling with Increased Competition and Rising Costs
Lufthansa is also feeling pressure on ticket prices, especially in long-haul flights to Asia, where competition has intensified. Additionally, customer compensation for flight cancellations and rebookings has further increased costs. As a result, the company’s net profit fell by 8% year-on-year, amounting to €1.1 billion.
Lufthansa CEO Introduces Cost-Saving Program: Steps Towards Automation and Cost Reduction
CEO Carsten Spohr plans to take several strategic steps to optimize Lufthansa’s flight operations and reduce costs. The company intends to shift more flights from its main brand, Lufthansa Airlines, to lower-cost carriers within the group. Additionally, it plans to automate more aspects of its operations to achieve cost savings. The goal is to increase adjusted operating profit by €1.5 billion by 2026.
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