Lufthansa Group CEO Carsten Spohr is a unique guy. Earlier this week, he made some interesting comments about his airline group, which can’t help but leave me scratching my head.
Carsten Spohr calls Lufthansa “problem child”
Lufthansa Group consists of a variety of airlines, including Lufthansa, SWISS, Austrian, Brussels, Eurowings, Discover, and more. During a media briefing on Monday, Spohr described Lufthansa as the “problem child” of the Lufthansa Group, and has stated that turning around the airline is a must for the wider success of the company. As Spohr explained, it’s “a clear goal that the Lufthansa airline will once again be our flagship for its 100th birthday in 2026.”
Spohr blames a lot of the carrier’s issues on the delay of new aircraft deliveries. For example, Lufthansa has been relying heavily on the Boeing 777X for fleet modernization, but that plane has been delayed by at least five years, and possibly even more. As Spohr explains, “we were just caught at exactly the wrong time” when it comes to fleet modernization.
Spohr claims that the airline is “flying 23 aircraft that we didn’t want to fly anymore,” and this impacts operating costs, plus the ability to expand to profitable markets.
But speaking of expansion to profitable markets, Spohr went on to state that the key to expanding profitably is through other airlines and subsidiaries. For example:
- Lufthansa Group is acquiring a stake in Italy’s ITA Airways, and hopes that this will help the airline boost margins and strengthen revenue, as the airline has a lower cost structure than Lufthansa
- Lufthansa wants to expand in regions like Africa and Latin America, but it doesn’t seem like Lufthansa actually wants to do that with its own aircraft; Lufthansa Group has outlined plans for both Brussels Airlines and Discover Airlines to get more jets, for these kinds of routes
I don’t understand what Spohr’s strategy is for Lufthansa?
Just as the US has the “big three” airlines (American, Delta, and United), Europe has the “big three” airline groups (Air France-KLM, IAG, Lufthansa Group). If you ask me, Carsten Spohr is kind of the Robert Isom of Europe, in terms of his airline group lacking a strategy (though in fairness, Isom at least seems like a nice guy).
Whenever Spohr talks about Lufthansa Group, I can’t help but feel like it almost sounds like someone talking about a company they have nothing to do with. It’s as if he’s an independent observer, rather than the person at the helm of the company.
Spohr wants Lufthansa to once again be Lufthansa Group’s flagship carrier, yet he’s light on details about what he’s going to do to create positive change. Spohr is basically crying over spilled milk, blaming any and all of Lufthansa’s issues on delivery delays.
Yet ironically in the same breath as talking about Lufthansa once again becoming the airline group’s flagship brand, he talks about how there are so many opportunities to cut costs by flying aircraft with other airlines and subsidiaries.
Arguably Spohr’s single biggest skill is setting up new subsidiaries in order to reduce labor costs, only for that to cause major issues every few years when union negotiations happen.
Just about all airlines around the globe are dealing with the same issues, which include higher labor costs, and yields not being as high as they were in 2023, due to increased capacity. So it’s a bit ironic that Spohr is angry that Lufthansa hasn’t been able to take delivery of new aircraft in order to expand to new, profitable markets. If these markets were actually very profitable, you’d think Lufthansa could adjust its network to accommodate them, no?
It’s fascinating to contrast the strategies at Air France-KLM and Lufthansa Group. Air France-KLM has a clear, cohesive strategy, with Air France and KLM serving their distinct hubs with slightly different strategies (Air France is the premium airline), and Transavia acting as the group’s low cost carrier. What a contrast to Lufthansa Group, where no one can keep track of the number of airlines. Heck, soon Lufthansa Group will have more brands than Marriott Bonvoy!
And let’s not even contrast the pace at which the airlines have introduced their new premium products. Lufthansa announced its Allegris cabins in 2017, and now has those cabins on half a dozen jets. Meanwhile how many dozens of Air France and KLM jets have all-new cabin interiors, in projects that have just been announced and launched in the past few years?
Bottom line
Lufthansa Group CEO Carsten Spohr has emphasized how he hopes to turn around Lufthansa by 2026, and once again make it the group’s flagship airline. However, the extent of his strategy seems to be praying that new aircraft actually get delivered, with few plans to change things otherwise. As a matter of fact, he thinks the key to improving margins is to outsource more flying to other airlines in the group.
What do you make of these comments from Lufthansa Group’s CEO?
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