Lufthansa CEO aims to revive ‘problem child’ airline by 2026

By Ilona Wissenbach and Joanna Plucinska

FRANKFURT (Reuters) – Lufthansa is aiming to revive its core airline by 2026 as one of Europe’s top carriers struggles more than its regional rivals with higher costs and prolonged delays in Boeing (NYSE:BA) plane deliveries, its chief executive said.

Carsten Spohr described the Lufthansa airline as the German group’s “problem child” and said turning it around is a must for the wider company’s success.

“(It’s) a clear goal that the Lufthansa airline will once again be our flagship for its 100th birthday in 2026,” he told reporters at a briefing late on Monday.

The comment comes as investors fret about the group’s third-quarter results due on Oct. 29, with its shares down 10% over the last six months.

Lufthansa, which also counts Austrian Airlines, Swiss and Eurowings among its carriers, has already issued two profit warnings this year, as spiralling wage costs, a squeeze on ticket prices and a tough aviation market make for a difficult recovery.

The delayed delivery of much-needed new jets is compounding ongoing issues, Spohr said, adding that Lufthansa had been hit “disproportionately” hard.

“We were just caught at exactly the wrong time, just (when it came to) the fleet modernisation,” Spohr said.

Lufthansa is still waiting for 41 new Boeing planes to arrive, with the 777x jets on order already facing years-long delays.

That has forced the airline to keep using the older Airbus planes the group had hoped to retire before the pandemic, Spohr said, hurting its ability to expand services on profitable routes and boost efficiency as newer planes use less jet fuel.

    “We’re flying 23 aircraft that we didn’t want to fly anymore,” he said.

Other European airlines, including Ryanair, have also been hurt by Boeing’s long delivery delays.

FINANCIAL STABILITY

One way to revive Lufthansa’s fortunes is to invest in further international growth, Spohr said, including its stake in Italian carrier ITA Airways.

Lufthansa has struggled with competition on its transatlantic and Asian routes, recently cancelling its Frankfurt to Beijing flights as Chinese carriers increased capacity.

The country’s airlines have been gaining market share on international routes as foreign airlines are deterred by weak Chinese travel demand, rising costs and extended flight times as they avoid Russian airspace due to the Ukraine conflict.

Lufthansa has said that it hopes to expand into newer regions, including Latin America and Africa, where it might have more of an advantage. New hubs with lower cost bases, such as in Italy, are also appealing ways to strengthen revenue and boost margins.