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Lufthansa Group: 'we will need to change ourselves, if we want to survive into the future'

8-May-2013 10:08 AM

Lufthansa Group executive board chairman Christoph Franz provided (07-May-2013) a positive interim assessment of the SCORE programme, but cautioned: "Our company is facing serious challenges. Global aviation has changed. Our industry is under pressure – especially in Europe. Competition is getting tougher and tougher. This can also be seen by looking at our company figures. Which is why I won’t even try to put a gloss on them: They are inadequate if we are serious about being profitable in the long term". The carrier is planning to  achieve sustainable profitability levels by 2015 at the latest. By then, the Group aims to use the SCORE programme to boost its operating profit to EUR2.3 billion. Mr Franz added: “Our industry is not only sensitive to crises, it’s also a high-cost sector: kerosene, fees and staff costs, investments in fleet, cabin and ground products – these are all major, fixed-size cost items. Few changes can be made here. So we will need to change ourselves, if we want to survive into the future. We want to shape the industry before it shapes us.” To achieve this goal, more than 2500 ideas for improving profitability have been generated by Group employees since SCORE was launched. Such suggestions include reorganisation of the Group’s administrative processes, eliminating duplicate structures, improving fuel efficiency or the strategic restructuring of the intra-European business segment with the new Germanwings. On the company's inability to improve profitability in 2012, he explained: "Numerous negative factors – including the high price for kerosene, which drove up expenses by some EUR1.1 billion – ate away at the SCORE successes. And yet without SCORE, we would have posted a negative result in 2012". Mr Franz also noted that 2013 and 2014 will be decisive for the successful implementation of SCORE activities and that their impact on profit will largely be visible only from 2013 onwards, there were signs of more positive business development in the first quarter of the current year. He said: “Demand in passenger business is following a satisfactory trend. SCORE is on track. Overall, first-quarter earnings for the Lufthansa Group are stable – despite restructuring costs. This gives us cause for optimism.” [more - original PR]  [more - original PR - German]