Lufthansa Group Profitability Divide: SWISS 10x As Profitable As Lufthansa

Not a surprise when LH business class seats are still predominantly 2-2-2, I don't know why anyone would want to fly them. All of their joint venture partners have strictly better seating than them.

Moving more business to Swiss (LX) is easier said than done. One of the reasons of its profitablity is that Swiss only has one hub (ZRH) and operates the other main airport (GVA) as a mere niche product. And ZRH is heavily slot restricted. So more activity in ZRH is almost impossible and opening a secondary hub would largely destroy their cost basis.

There will be more capacity once the new terminal is built, but that is a long way out and there will be disruptions until then.

Where are Discover Airlines, Lufthansa City Airlines, Air Dolomiti, ITA and SunExpress? I can't find info on them

Perhaps non-ME3 carriers are about to see a boost as passengers seek alternatives that don’t connect through there. For reliability, I’d prefer Swiss or LH over EK and QR these days…

The only time I tried LH (because it was significantly cheaper than a SkyTeam flight, for which I have elite status), I was far from impressed: 2-2-2 in J (350), missed connexion, downgrade on the last leg, which LH refused to compensate (I had to claim it through arbitration/SRV). Let's say that I saw firsthand what's a malfunctioning airline...
If they delivery that well on a regular basis, no wonder no one wants to fly with them...

Not sure how or why they believe they will see better profitability in 2026 with rapidly rising fuel costs. That is the largest expense in the airline industry after labor.

What’s shocking to me, but maybe someone can confirm. Isn’t LX much much much smaller than the LH airline (obviously isolating just LH operations from LH Group)? Basic searching online seems to indicate that LH is 3x larger to LX

Perhaps it is also of consideration that Austrian manages to provide Lufthansa Group a healthy profit despite its proximity to the modern Munich hub of Lufthansa. It is hardly much more convenient to transit Vienna than it is Munich. Perhaps there is something to be learned from the management skill of Vienna and the commitment to quality premium cabin catering. Of course, customers who can afford to pay more will pay more for a better experience.

And now we wait and see how the Italians contribute to the group with ITA in the fold, so to say.

I suspect your question is rhetorical but just in case it isn't:
Some travellers are more comfortable flying their national carrier.
Some travellers do not take the time to research other carriers that may be flying the same route.
Some travellers suck at the LH loyalty teat and will fly LH no matter how inferior the product and no matter how badly they are treated.

LH is a perfect representation of Germany. Stucked in it's old ways

GVA is a shockingly garbage airport for such a great country

Gva is good enough for the traffic served and way less hectic than Zrh

Blaming Allegris delays for a 0.9% margin is looking at this like a travel agent, not an equity analyst. Lufthansa’s problem isn't a lack of sliding doors in Business Class; it's structural labor liabilities and geography.
First, LH Mainline is a permanent hostage to German unions (Ver.di, UFO, VC). You can't run a profitable hub-and-spoke model when rolling strikes wipe out hundreds of millions in EBIT every single quarter.
Meanwhile, SWISS prints money because they operate in a captive, hyper-premium market (Zurich finance/pharma) with highly inelastic demand. They collect revenue in strong Swiss Francs while leveraging LH Group's scale to pay backend costs in weaker Euros. And crucially, their labor force actually shows up to work.
Add in the German government's massive aviation tax hikes (Luftverkehrsabgabe) that artificially depress demand at FRA and MUC, and mainline LH's business model is structurally broken.
Group management knows this. That’s exactly why Carsten Spohr is desperately shifting capacity to Discover and City Airlines. He isn't trying to "turn around" the flagship brand; he is actively trying to bypass mainline labor contracts just to survive

I'm not going to disagree with your analysis but LH's customer experience sucks. See Sam73's comment below. LH used to be a fine airline that I looked forward to flying but now it plumbs new depths daily.

I haven't been through GVA in ages but we travel as a group each year through ZRH and one buddy went through GVA last year. He said it was a terrible airport. He travels a lot as well..I thought it was funny. I remember it being ok, not terrible.

While I mostly agree with this, the CHF being so valuable is not always good. Lots of revenue is collected in other currencies. But the main point I agree with is "captive Market". The direct flight to and from Zurich are super expensive.

This is totally unrelated to the post, however, just as a heads up, at some point in the last day or two, something on the backend has been own-blocking ads on OMAAT, at least outside the United States (trying from Spain where I live, but I suspect it's configured incorrectly for other regions. I don't see a single ad block anymore (and I have no ad blockers on/enabled). Just error messages.

Right now every ad block on the site shows an error 403 "The Amazon CloudFront distribution is configured to block access from your country. We can't connect to the server for this app or website at this time."

You probably wouldn't know about it, unless someone outside the US told you, but you would notice the random unexplained drop in ad revenue/pageviews. As someone who also runs a blog/site, figured you'd want to know. Cheers!

Same in the Czech Republic and Austria.

If you want it polished but still in your straightforward voice:

The film LH has always had the worst business class seat. From the awful angled lie-flats that stayed around forever, to the later "upgrade" to the 2x2x2 and 2x3x2 lie-flat layouts - long after 1x2x1 had already become the industry norm.

Then came the Allegris disaster, which still is not enough for me to take the chance of flying with them. I actively avoid LH.

Premium Economy is also in the same cabin as Economy, with no divider. Granted, the price difference reflects this, but it is essentially Economy with a larger seat - so again, not really appealing. It's a no.

Basically, LH is a no for me, and many of my colleagues and friends.

Now multiply that by the many thousands of people who do the same, and you start to see the issue. Yes, they still have a captive audience, but that audience has been slowly slipping away for years.

The financial results reflect this.

While they have some labor and the LH group cost benefit the 'highly inelastic demand' is less credible when faced with a material stress. Swiss Air filed for bankruptcy in the early 2000s, while Lufthansa didn't. Local demand wasn't enough to prop up Swiss. Yes it tried to expand by buying minority stakes in other airlines, but Lufthansa was also busy forming alliances.

Getting the exact same issue here in Sydney, Australia. Thanks for highlighting this RM.

Swiss has tasteful premium cabins. Eurowings has low fixed costs and an endless stream of eager tourists. Austrian is a flying three-star restaurant. And Brussels posts solid yields on the four routes it flies.

Lufthansa has two fortress hubs and a hard product refresh so outdated that if it were a real seat, it would need replacing by now. And that's about it.

But fear not. Once ITA joins the family, even deadbeat Lufthansa will look like a spotless overachiever.

Unless you need a nonstop to/from MUC or FRA, why would you not choose Swiss or Austrian? I know I do. In a world of uninspired cabins, mediocre lounges, and lack of plugs and WiFi, LH doesn't do a single thing to differentiate itself.

Very interesting , I have noted you never mention a little airline that does very well financially on the international stage Qantas Underlying Profit Before Tax of $2.39 billion and a Statutory Profit After Tax of $1.61 billion.

I’ve only flown Swiss and Lufthansa in coach. Lufthansa used to be a great airline but they are absolutely terrible now. Swiss on the other hand have been great each time I’ve flown them. Little things like a 7” recline on their 777s make a big difference to the passenger experience.

Same from Italy

Unfortunately, the route network of Swiss is way smaller and less frequent. Swiss is much more short-haul oriented. So even living in Switzerland, you often have to take Lufthansa or another carrier.

@Cedric: The ZRH slot restriction is due to its runway system, not because of terminal capacity. The new terminal will not enable one additional slot …

LH cabin crew layover rest for long haul flt is double of other group airlines, imagine how much can save cost already

@yoloswag , we have discussed this multiple times. Lufthansa have more flights to more places than the competition. Plenty of people will prefer the 2-2-2 with a single connection over connecting twice in order to access a better product.

The comparison, as presented here, is almost completely meaningless. Lots of factors go into EBIT that in only one year may or may not tell you much about how well the company is run. Even more so here since the LH group has, up to a point, the ability to make some choices about where they can stick some costs (like charges to the IT stack and so on).

That being said, Swiss has much higher revenue per ASK, because Zurich is a super profitable hub, because Swiss is mostly a long-haul airline, because it sells a lot of premium cabin seats etc. LH (for now) still operates lots of short haul flights, FRA and MUC are expensive to run and messy and lots of LH airports are more competitive than Zurich, so give lower margins. I just eyeballed the AR, but judging by all of that, Swiss always going to be more profitable, given the role it plays in the group. Brussels is probably the one performing the worst (low revenue, high cost per ASK).

It is no surprise that Swiss is so profitable compared to Lufthansa. Fly each in business class and see which one you’d fly again. Swiss is by far the better option. Lufthansa international business class is mediocre at best, worse than any American carrier, and that’s saying something.

Swiss is so much better, and that’s where and why they are the profit center.

Going to and from Zurich is super expensive. Compare to the other countries of LHG hubs.