Deutsche Lufthansa AG unveils new strategy

Deutsche Lufthansa AG unveiled (09-Jul-2014) an "extensive range of actions" designed to assist the company in "regaining its role as the benchmark of the aviation sector." The company announced the following plans:

• The development of the 'WINGS' multi-platform concept in European markets, with amalgamation of the various platforms of its point-to-point business and a potential expansion to intercontinental services. The 'WINGS' brand will be "specifically aligned to the high-growth market for private air travel" and will build on the Germanwings concept. Germanwings' fleet will be further expanded to 60 aircraft;
• With Eurowings as its starting platform, the Lufthansa Group will create "a competitive European air travel product for continental travel." The carrier's fleet of Bombardier CRJ900 aircraft will be replaced with up to 23 A320 aircraft, with the company to establish its first base outside of Germany in Basel with an additional fleet of two to four A320s. The carrier will commence operations in spring 2015;
• The company also plans to establish a "competitive new long-haul platform under the WINGS banner for the price-sensitive segment of private travel." Lufthansa is conducting studies into whether the carrier will be established alone or with a partner. Negotiations with Turkish Airlines on the partner option "are already at an advanced stage." The new carrier is "likely" to commence operations in winter 2015, with its fleet to be gradually increased to up to seven A330 or Boeing 767 aircraft;
• Lufthansa Passenger Airlines is considering "to what extent up to nine of its A340s could be operated at substantially lower unit costs, either on new routes or on routes currently threatened with closure. Negotiations are under way with all the internal and external stakeholders involved to achieve the cost reductions required.";
• Lufthansa is also "working intensively to further develop its bilateral partnerships with other air carriers." The company recently concluded an agreement with Air China on partnerships on the MRO and passenger fronts, and ultimately a JV;
• Deutsche Lufthansa will also devote "sizeable resources" to developing its service companies. Lufthansa stated: "World market leaders Lufthansa Technik and LSG Sky Chefs are also benefiting from the expansions of numerous Lufthansa competitors, especially the Gulf-based carriers, and thus serve as a natural 'hedge' in the global competitive landscape." The companies will invest in expanding their businesses, "with a focus on Asia and the Americas. LSG Sky Chefs also aims to increase its involvement in related markets beyond the aviation sector, such as the rail catering segment."

Deutsche Lufthansa AG chairman and CEO Carsten Spohr said: "The global market for air transport continues to grow. But in the dynamic and highly price-sensitive market segments, our current platforms only enable us to exploit the growth potential to a limited extent, in view of their sometimes over-rigid cost structures. That's why we are now seeking to tap new growth areas, by creatively and innovatively refining our products and services in both the airline sector and - especially - related markets. By 2020 we aim to have raised our revenues from our new businesses, our new platforms and our service companies from the present 30% to 40% of our total revenue flow." [more - original PR - English/German] [more - original PR - II]