Lufthansa Group set for restructuring
Lufthansa group set for restructuring. The airline group consists of parent airline Lufthansa, Austrian Airlines, Swiss and EuroWings. Lufthansa group has decided to implement restructuring measures due to low demand and drop in air travel.
According to their assessment, it will take years for the aviation industry to operate like how it did pre crisis levels. Lufthansa Group has grounded almost 700 of its 763 aircraft. These decisions are set to restructure the company’s strategy and organisation in the long term.
Lufthansa has announced it will restructure its fleet to start with to reduce costs. The airline will decommission 6xA380-800 aircraft out of its 14 aircraft in its fleet. These 6 aircraft was already scheduled to be sold to Airbus in 2022. Along with the A380, its fellow Airbus A340-600 aircraft is also set to be decommissioned. 7x A340-600s out of its 17 aircraft will not be part of its fleet.
The group has also announced decommissioning of its B747-400 fleet where 5 out of 13 will be decommissioned. The main reasons are because of high economic costs and environmental impact these aircraft have in comparison with the latest technology aircraft. This is coming at a time when airlines such as KLM, British Airways and Qantas have been retiring or storing their aircraft.
From its short-haul fleet 11xA320s will be withdrawn from its operation. As a result of this Lufthansa will be forced to reduce operations from its bases at Frankfurt and Munich.
Lufthansa City line and EuroWings
Lufthansa City Line, which has been operating long haul operations to tourist destination is set to reduce 3xA340-300 from its fleet. Eurowings is also set to reduce 10xA320s from its fleet which will be phased out.
Eurowings long haul operations will also reduced. The process of integration of the airline into a single unit will be accelerated. It also added Germanwings operation will be discontinued. This is set to affect around 1400 employees who come under its banner.
There will be similar restructuring of Swiss as well as Austrian Airlines. Austrian Airlines has said it will only have 25%-50% of demand during summer 2020 compared to last year. Both the airlines will reduce fleet and terminate economically invaluable destinations.
There will be early phasing out of old aircraft and delay in receiving new orders. The group has also said it will be terminating almost all its wet lease agreement with other airlines.
There also will be job cuts but the airline had said it is trying to retain as much of staff as possible. Lufthansa already announced last week that it was placing 87,000 workers on government-backed shorter hours schemes where most of them are German.
Lufthansa is one of the first airlines to have come out with a concrete strategic restructuring of its fleet and organisation with a long term vision. In the next few weeks other airlines will follow queue and implement similar strategic measures such as phasing out old aircraft, terminating routes and lay offs and offering a long term plan to overcome this slide.
The next few years will be of a great challenge to the aviation industry as a whole. If history has taught us something, its nothing is permanent including the current slump.