Lufthansa may launch low-cost long haul flights under a new brand as part of plans to attract more price conscious travellers and battle competition from Middle East carriers and low cost airlines, its new chief executive said yesterday.
Carsten Spohr, who took the reins of Europe’s largest airline by revenue in May, needs to win back investors after a profit warning last month wiped $2bn (€1.4bn) off the airline’s market value in a single day.
Short-term measures to make up for the lower-than-expected profit in 2014 and 2015 include increasing the number of seats Lufthansa offers by only 2% in the winter, rather than 4% as originally planned, he told journalists as he unveiled his plans for the German airline.
The challenges facing Lufthansa are numerous — Middle East carriers are expanding aggressively on long-haul routes, while low-cost carriers are gaining customers on short-haul routes.
In addition, cargo markets have not recovered as quickly as expected and Lufthansa has had to cut prices on its normally lucrative North Atlantic routes after it and rivals flooded the market with seats.
It’s not just Lufthansa that’s suffering. Fellow legacy carrier AirFrance-KLM also cited overcapacity and cargo woes as reasons behind its own profit warning this week.
Mr Spohr, who took the top job in May after heading the airline’s passenger business, said Lufthansa would focus more on attracting leisure travellers with lower cost tickets and no-frills services.
Mr Spohr said 75% of all intercontinental air travel and 79% of European air travel was for private reasons, rather than business trips.
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