Lufthansa: The goal to increase profitability goes through 4,000 layoffs

• By Viki Tryfona

Lufthansa, Europe's largest airline group, has officially announced its plans for a profound transformation of its operations, with a focus on digitalization and automation of processes. The price will be the loss of around 4,000 administrative jobs by 2030, as management confirmed during the Capital Markets Day held in Munich.

According to CEO Carsten Spohr, the move is part of a consolidation and modernization strategy, which aims to reduce costs and increase efficiency. Lufthansa is now setting a more ambitious target: adjusted operating profit (EBIT) of 8%-10% of revenue, compared to the previous 8%. The management's optimism is also reflected for this year, where operating profits are expected to significantly exceed the 1.6 billion euros in 2023.

Company consolidation and new areas of growth

The group intends to bring its subsidiaries –Swiss, Austrian and Brussels Airlines– closer together under a single, more centralized management model. Eurowings will be strengthened as an autonomous low-cost airline, while particular emphasis is placed on the logistics and aircraft maintenance sector, with the aim of expanding even into the defense sector.

At the same time, Lufthansa remains a minority shareholder in the Italian ITA Airways, a move that demonstrates its strategy for a strong presence in southern Europe.

The restructuring strategy is accompanied by the promise of stable returns for shareholders. The management announced that the dividend policy will range from 20% to 40% of consolidated net profits, reinforcing the group's image as a reliable investment.

The "turbulence" in labor relations

The announcement of job cuts at the administrative level is not the only challenge for the company. The pilots' union Vereinigung Cockpit (VC) is holding a vote on possible mobilizations, focusing on the pension system. Lufthansa management has rejected the pilots' demands as financially unsustainable, which creates a risk of new labor conflicts.

A future with a strong financial basis but a social cost

Lufthansa is attempting to shield its business model against the challenges of a highly competitive market, investing in technology, consolidation of forces and new sources of revenue. However, this strategy comes with a social cost, with thousands of jobs being lost and the risk of new mobilizations remaining visible.

The group is now called upon to balance between improving efficiency and maintaining social cohesion, so that the new “journey” that it is embarking on is not overshadowed by internal turmoil.