Lufthansa Group is implementing some major changes to how it does business, in order to both increase profitability and improve customer satisfaction. That combination always makes me a bit skeptical, especially when it’s coming from Lufthansa Group.
I first covered these changes when they were rumored a few weeks ago, but they’re now official, as Lufthansa Group has made an announcement about this. Frankly, I’m not sure I fully understand what exactly this is supposed to accomplish, but…
In this post:
Lufthansa’s controversial “Matrix Next Level” strategy
Europe has three major global airline groups. One of those is Lufthansa Group, which includes Lufthansa, SWISS, Austrian, Brussels, ITA, Eurowings, Discover, etc. While the airline group is based in Frankfurt, the individual airlines have a fair bit of autonomy in terms of their strategy. At least that has been the case up until now.
However, as of January 1, 2026, Lufthansa Group will be implementing a new strategy intended to bring the airlines closer together, known as “Matrix Next Level” (lol?). The idea is for Lufthansa Group to increasingly make decision for individual airlines centrally, in Frankfurt. Lufthansa Group CEO Carsten Spohr believes that this realignment is needed in order to improve profitability and customer satisfaction.
As the company describes it, the changes affect not only the structure of the organization, but even more so the processes, the financial management framework, and cross-group collaboration. The aim is for the airlines to work more closely together to strengthen and expand market position of the various hubs.
The airlines will continue to make their own decisions about the customer experience, including for the inflight product, catering, lounges in home markets, and passenger service. Hub airlines will also remain responsible for the management of their respective flight operations and operational flight services.
But in areas that are less visible to passengers, cooperation between airlines within the group will be even more integrated and connected, as is already the case with the Miles & More loyalty program (where it’s one program, but with branding for individual airlines).
In the future, network management for short and medium haul flights will also be managed centrally. Lufthansa Group claims this model has already been established for 10 years for long haul routes. Lufthansa Group claims that guests who already use more than one group company for their travel will benefit from a more coordinated experience.
Obviously the individual airlines largely aren’t too jazzed about this concept. SWISS is probably the least happy about this, as it’s one of the group’s best performing airlines, and currently most aspects of the company are managed in Zurich.
My take on Lufthansa Group’s management strategy shift
In theory, there’s nothing wrong with centralizing more management functions within an airline group, given the potential synergies. That being said, I have a few thoughts…
First of all, I’m always a little skeptical when the claimed motivation for something is to both increase profits and customer satisfaction. It’s rare that those two things go hand-in-hand, especially at an airline like Lufthansa.
Second of all, purely in terms of track record, I can’t help but be a little skeptical of centralizing more functions in Frankfurt. It honestly amazes me that we haven’t seen an overhaul of Lufthansa Group management, given the repeated shortcomings we’ve seen over the years. Based on what record is it believed that decisions could be better made in Frankfurt than at other bases?
Next, there’s a certain irony to Lufthansa Group claiming that individual airlines will maintain control over their inflight products, while SWISS also introduces the new SWISS Senses product, which is a direct copy of Lufthansa Allegris. This product makes little sense for the airline, to the point that SWISS has to install a 3,000-pound weight on its A330s in order to accommodate the new first class.
For that matter, I’m just downright confused by what will actually be changing. It’s emphasized how short and medium haul flights will increasingly be planned centrally. Fair enough, but… isn’t that already the case? Just look at schedules between hubs of group airlines (like between Zurich and Frankfurt), and you’ll see that schedules and flights are already mostly coordinated.
So I guess we’ll find out in the coming months if this centralized management causes any changes that guests notice. Or is this just all about efficiency and eliminating redundant roles?
Bottom line
Lufthansa Group plans to centralize more management functions in Frankfurt as of the beginning of 2026. The idea is to leave less control with individual airlines of the group, like SWISS, and increasingly have decisions made at the airline group level.
In theory, there are no doubt synergies there, and I can see upside. The challenge is that it’s hard to have much faith in Lufthansa Group management, given its track record with so many things in recent years. While the claim is that the goal is to increase profits and customer satisfaction, I would speculate that this development might help more with one of those than the other.
What do you make of Lufthansa Group’s management centralization plans?
The problem of Lufthansa is: Trade Unions.
Without them, there is logical need having Lufthansa Airlines, Air Dolomiti, Lufthansa City, Lufthansa Cityline, Discover Airlines, Eurowings and Eurowings Europe alone in the German market.
I guess it's mainly the pilots in VC who don't understand the mess they are forcing LH into.
Not sure what Spohr means by that. To my knowledge Network Planning and Revenue management already are at least coordinated (especially in RM).
About 15 years ago, before Eurowings and Lufthansa City and all that, they optimized their entire LH short-haul network as a whole, but they later moved to a hub based model because of the reduction in complexity that delivered. Managing a group of airlines will at very least be very challenging.
Are the corporate heavies being forced to relocate from Köln to the amalgamated operations centre, or will they be allowed to remain in their ivory tower, far away from the vulgar unpleasantries of day-to-day management?
There is no meaningful function in Cologne and there hasn‘t been in the last 30 years.
I’m surprised that the most obvious point is not mentioned: AI
The complete planning process of routes of so many airlines will not be on paper. So computer are already in play.
If you want to optimize the planning, react quickly on changing demands, you need ONE place where all information will be captured.
They could choose any location, but Frankfurt it will be. I believe the number of people required will...
I’m surprised that the most obvious point is not mentioned: AI
The complete planning process of routes of so many airlines will not be on paper. So computer are already in play.
If you want to optimize the planning, react quickly on changing demands, you need ONE place where all information will be captured.
They could choose any location, but Frankfurt it will be. I believe the number of people required will be drastically lower as actual and there is no claim: Ai kills jobs.
Further it is just the first step. There are so many more steps possible to combine the airlines. Why does every airline need their own board cabine? I believe LH has in China a base, why does they only work on LH flights and war not shared with LX? I know worker councils will not like it, but I’m just mention this
Just curious how KL & AF handle their 'marriage' and to what degree it is 'open' ...
Maybe Lufty bit of more than it can chew, kinda like herding cats ?
It's OK to move certain back office duties to one location like payroll, A/P, IT, frequent flier programs, airline alliances, purchasing (leverage in bulk purchases), etc. This can extent to the purchase of aircraft and service contracts as well. In so many words, you need economy of scale.
However, each airline needs to maintain its own flavor and style. Each airline president has responsibility and authority over the hard and soft items the PAX...
It's OK to move certain back office duties to one location like payroll, A/P, IT, frequent flier programs, airline alliances, purchasing (leverage in bulk purchases), etc. This can extent to the purchase of aircraft and service contracts as well. In so many words, you need economy of scale.
However, each airline needs to maintain its own flavor and style. Each airline president has responsibility and authority over the hard and soft items the PAX comes in contact with. The customer needs the sensation he/she is dealing with their favorite airline. A difficult balance and a constant tug a war between the holding company (MBAs) and the individual subsidiaries (Marketing)
Alaska and Hawaiian are going thru this situation as we speak. How does Alaska eliminate the Hawaiian name without killing the "aloha" sensation of the islands. Tricky balance!!
Carsten is really looking at how to cut as many costs as possible because he really needs that performance bonus to bail his wife out of the 10+ year sentence that awaits her (she ran over a pedestrian in Italy and killed her).
She’ll have to be extradited first, as she and her daughter immediately fled Sardinia after the accident.
Also, what’s up with Vivian’s nepo job with Lufthansa? German corporate governance really is a disgrace.
The reporting of the incident in question indicates that she fainted on the spot when confronted with the sight of the victim. The investigation of the local authorities is ongoing of course, and as such none of us can say what fault lies with her in the circumstances of this tragedy. Through her Italian attorney Ms Spohr has expressed her deepest condolences.
If Step #1 isn't "Fire Carsten Spohr" then all the consolidation in the world won't do a thing to goose profits.
Here's a thought to brighten your day. A LH FA on a recent flight told me that there will ba big to-do next year to celebrate their 100th anny. Many employees hoping he takes the opportunity to retire at that point. A regular two-for-one. We can hope.
Well the new CEO of SWISS is German of course. His COO is a Swiss man, and perhaps fittingly both he and the CEO were pilots for Lufthansa Group, and you may recall that Carsten Spohr himself was a pilot as well.
However, a Swiss and Belgian man, the former COO of SWISS is now the 2nd in charge at Lufthansa with Mr. Spohr. As such there is a balance of Swiss nationality representation in the executive management boards of both Frankfurt and Zurich.
Meaning what? SWISS is still screwed. Austrian too. The only airline this arrangement might improve is the ghastly Brussels.
Of course the current model of splitting everything into 5 business units makes zero sense (I'd go as far as saying that even keeping separate brands alive is a massive waste of money). The problem is that LH plans to transfer control to the least efficient of the business units in question.
LH management is fed up with the other group airlines making them look bad, so they want to reduce the customer experience at the other airlines to the LH level.
Then they won't get any customer feedback along the lines of "LH, why can't you do it like Swiss does"
Fewer complaints => "better customer satisfaction" !
German groups are notorious for this - as are some American ones.
Surely, there is a lot to be said for putting all of the corporate nutcases into one central institution? …. :-)
Indeed.... I'm am sooo reassured to see the 'inmates' running the 'asylum' !
... lol
LOLhansa
So controlling German nazi swines are trying to dominate and control again ? Well, well, it only took 80 years for the return.
I will trust them if their first order of business is to rip out the failed Allegris product and put in existing reverse-herringbone seats.
Does the central management organize things like seat installation on new aircraft? The future looks great (for KLMAF and BAEC).
I am Swiss, living in Switzerland. The press here is furious about the change, but indeed I don’t ser much change for the future. Lufthansa Group is well aware they are earning good revenue in Switzerland, accordingly they will schedule flights for the future
I agree, Swiss will schedule flights for the future. This is 100% guaranteed, regardless of whether scheduling is out of Zurich or Frankfurt.
Intercontinental Singapore rebranding and leaving IHG end of 2025. What’s your take on this trend of corporate rebranding among the big hotel chains?