Lufthansa boss wants to revive the “problem child” airline by 2026

By Ilona Wissenbach and Joanna Plucinska

FRANKFURT (Reuters) – Lufthansa is aiming to revive its core airline by 2026 as one of Europe’s leading airlines struggles more than its regional rivals with higher costs and longer delays in delivering Boeing planes, its chief executive said.

Carsten Spohr described the Lufthansa airline as the German group’s “problem child” and said the turnaround was a must for the company’s overall success.

“(It is) a clear goal that the Lufthansa airline will once again be our flagship on its 100th birthday in 2026,” he told reporters at a briefing late Monday.

The comment comes as investors fret over third-quarter results due on October 29 for the group, whose shares have fallen 10% in the past six months.

Lufthansa, whose airlines include Austrian Airlines, Swiss and Eurowings, has already issued two profit warnings this year as rising labor costs, pressure on ticket prices and a difficult aviation market make a recovery difficult.

Delayed deliveries of urgently needed new jets are exacerbating ongoing problems, Spohr said, adding that Lufthansa had been hit “disproportionately” hard.

“We were caught at exactly the wrong time, just when it came to modernizing the fleet,” said Spohr.

Lufthansa is still waiting for the arrival of 41 new Boeing aircraft, although the 777x jets it has ordered are already experiencing years of delays.

This has forced the airline to continue using the older Airbus aircraft that the group had planned to retire before the pandemic, Spohr said, affecting its ability to expand services on profitable routes and increase efficiency as newer aircraft use less kerosene.

“We are flying 23 planes that we no longer wanted to fly,” he said.

Other European airlines, including Ryanair, have also been hit by Boeing’s long delivery delays.

FINANCIAL STABILITY

One way to revive Lufthansa’s fortunes is to invest in further international growth, Spohr said, including a stake in Italian airline ITA Airways.

Lufthansa has struggled with competition on its transatlantic and Asian routes and recently canceled its flights from Frankfurt to Beijing as Chinese airlines increased capacity.

The country’s airlines have gained market share on international routes as foreign carriers are deterred by weak Chinese travel demand, rising costs and lengthened flight times as they avoid Russian airspace due to the Ukraine conflict.

Lufthansa has said it hopes to expand into newer regions such as Latin America and Africa, where it may have a greater advantage. New hubs with lower cost bases, such as those in Italy, are also attractive opportunities to increase sales and increase margins.

(Reporting by Ilona Wissenbach and Joanna Plucinska in Frankfurt; Editing by Josephine Mason, Kirsten Donovan)