Deutsche Lufthansa AG
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- Deutsche Lufthansa AG
Lufthansa Aviation Center
60546 Frankfurt / Main
Ph: +49 69 696 28010
Swiss Global Air Lines
Deutsche Lufthansa AG is a global aviation group which operates in five primary business segments: Passenger air transport, logistics, MRO, catering and IT services. Originally established in Jan-1926, Deutsche Lufthansa AG maintains its Corporate headquarters in Cologne, Germany while several departments are located in the Lufthansa Aviation Center at Frankfurt Airport. The company is listed on the Frankfurt Stock Exchange (FWB: LHA).
Although Lufthansa is involved in a range of industry segments, its core business is the provision of passenger air transport services, with the collective passenger airline group accounting for over two-thirds of the company's total revenue. These services are delivered through its numerous airline subsidiaries.
Deutsche Lufthansa AG holds majority stakes in a number of airlines including:
- Deutsche Lufthansa AG (100%, since 1954)
- Lufthansa CityLine GmbH (100%, since Mar-1992)
- Lufthansa Cargo AG (100%, since 1994)
- Air Dolomiti S.p.A. (100%, since Jul-2003)
- Eurowings Luftverkehrs AG (100%, since 1-Apr-2004)
- Eurowings Europe GmbH (23-Jun-2016)
- Swiss International Air Lines (Swiss Global Air Lines) (100%, since 1-Jul-2007)
- Edelweiss Air AG (100%, since Nov-2008)
- Germanwings GmbH (100% since 1-Jan-2009)
- Austrian Airlines AG (100%, since Sep-2009)
- Tyrolean Airways Tiroler Luftfahrt GmbH (merged with Austrian on 01-Apr-2015)
Deutsche Lufthansa AG also holds minority stakes in a number of airlines including:
- SunExpress (50%, since Apr-1990)
- Brussels Airlines (45%, since 15-Sep-2008)
- Aerologic GmbH (50%, since 19-Jun-2009)
Lufthansa share price
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The A380 is once again under media scrutiny, despite there being no major movement on the type. Comments from Air France and Qantas about not taking further A380s have long been assumed, and it has been apparent that Malaysia Airlines does not even have the need for its A380s. Singapore Airlines not renewing the lease on its first A380 is hardly surprising, and offers no definitive conclusion about the A380 or second-hand market; early A380s had different production and are not as efficient as later models. The lack of movement on the A380neo continues to irk the model's largest customer by far, Emirates, and may not make for a productive relationship as Emirates weighs an A350 or 787 order.
For most, the A380 continues to fly. How and where it flies is changing. Flights to and from the Middle East are becoming more common as Gulf airlines, and mostly Emirates, take delivery of A380s. A further shift to the Middle East is inevitable. In Japan there has been a near exodus of A380s; airlines dropping the type as they moved from Narita to Haneda, which cannot accommodate the A380 during the day, and Singapore Airlines down-gauging. Intra-Asia flying is decreasing – notable given the growth of A380s based in the region. Services by the A380 to Australia are growing, perhaps as it becomes an easy market for airlines to redeploy capacity amid European security concerns and trans-Pacific overcapacity.
The new Lufthansa Group and Singapore Airlines (SIA) Group joint venture open up opportunities for additional capacity from Singapore to Germany and Switzerland. Lufthansa is confident the improved connectivity beyond Singapore which comes with the JV will help support higher traffic and capacity levels while SIA will benefit from improved connectivity beyond its three German and Swiss gateways.
The two airline groups recently already added over 1,100 weekly one-way seats from Singapore to Germany and Switzerland, representing expansion of 8%, ahead of the formal start of the JV. The expansion included the launch of flights by SIA to Dusseldorf, a route that likely would not have been viable without the JV, and the up-gauging of flights to Singapore by Swiss from A340s to 777-300ERs.
Both airline groups are now considering further capacity increases as well as new routes. Lufthansa is looking at using its new A350 fleet to resume Singapore-Munich, which would supplement its daily Singapore-Frankfurt A380 service and give the group 21 weekly frequencies and nearly 8,000 weekly one-way seats under the JV compared to 31 frequencies and nearly 10,000 weekly seats for SIA.
Lufthansa Group is aiming to increase sales in Indonesia through a new codeshare with Singapore Airlines (SIA) and SilkAir, along with a new interline with Garuda Indonesia. Lufthansa suspended one-stop services from Frankfurt to Jakarta in late 2015, but should be able to serve the fast-growing Indonesian market better through partnerships.
Indonesia is one of eight markets covered under the new joint venture between Lufthansa and Singapore Airlines. However, Lufthansa does not want to rely entirely on the JV to cover Indonesia and has just implemented a new special prorate agreement with Garuda.
Indonesia is Lufthansa’s second largest offline market in Southeast Asia after Malaysia. Lufthansa is also using the new JV with SIA to cover Malaysia, as it dropped services to Kuala Lumpur in early 2016.
Lufthansa Group’s new joint venture with Singapore Airlines (SIA) will significantly improve Lufthansa’s position in the key offline markets of Australia, Indonesia and Malaysia. Lufthansa anticipates it will be able to implement the new JV in early 2017, to cover four markets in Asia Pacific along with four markets in Western Europe.
The JV should improve Lufthansa’s ability to compete against Gulf carriers. It should also help support additional nonstop capacity from Singapore to Germany and Switzerland.
This is Part 1 in a series of analysis reports on the Lufthansa-SIA JV. This part will focus on Australia, which is Lufthansa’s largest offline market in Asia Pacific. Subsequent parts will examine in more detail the Singapore market along with Indonesia and Malaysia, which are Lufthansa’s two largest offline markets in Southeast Asia.
The Brexit referendum produced a vote for the United Kingdom to leave the EU, although this process has not yet been formally invoked. In the scope of aviation, one outcome is the potential loss of the UK in shaping air service agreement negotiations. The UK has been a liberalising voice, one that often counterbalanced more protectionist views from France and Germany. The UK is often able to galvanise the smaller EU states too.
The EU now has mandates to negotiate open skies with states, including the UAE, Qatar, Turkey and the ASEAN bloc. The UAE and Qatar, home to the three Gulf network airlines, are expected to produce the most contentious negotiations. France and Germany will surely takes cues from Air France and Lufthansa to impede Gulf growth. In this light there are questions about whether the talks are genuinely motivated, or merely designed to draw out the discussion and thereby not produce any additional traffic rights while under negotiation.
What Air France and Lufthansa need is a real, lasting solution, rather than persevering Canute-like with stonewalling. Although a partnership seems logical, they may have waited too long. The Gulf airlines have found that they can succeed on their own.
Part 1 of CAPA's Brexit follow-up report assessed the ASK exposure of UK and non-UK airlines to market segments where existing traffic rights could potentially change once the UK finally leaves the European Union. This second part reviews recent comments by leading European-listed airlines on how they see the impact of Brexit, both in the short term and in the longer term. Most of them acknowledge that there are considerable uncertainties, while simultaneously insisting that they will not be significantly affected in the long run.
There have been two initial impacts on airlines. First, Brexit has added to economic uncertainty, thereby muting demand and lowering yields. The magnitude and duration of this impact is unpredictable. Secondly, the consequent weakening of the GBP has made outbound international travel from the UK more expensive and less appealing, and lowered the value of GBP revenue earned by airlines.
The longer term impact will depend on whatever new traffic rights regime is negotiated between the UK and the EU. As a number of the airlines have acknowledged, this remains unknown and is, indeed, unknowable until the UK formally triggers its exit from the EU and then completes its two-year exit negotiations.