Eurowings develops innovative partnership approach, but CASK reduction may not go far enough

In a 10-Jun-2016 presentation to equity analysts in London Lufthansa's Karl Ulrich Garnadt, the executive board member responsible for Eurowings, talked of his excitement for this "very ambitious, far reaching, very important" project for the Lufthansa Group. The group is developing an innovative partnership approach to allow other airlines to join its LCC activities under the Eurowings brand.

In 2011 the combined Lufthansa/Germanwings non-hub point-to-point network served 110 destinations and offered 24 million seats, of which only approximately nine million were operated by the LCC subsidiary. In 2016 the new Eurowings network has 135 destinations and offers 26 million seats (this comprises those operated by Eurowings and those yet to be transferred from Germanwings, while none are operated by Lufthansa).

The transfer of traffic from Lufthansa to Germanwings helped to turn around losses of more than EUR200 million. Germanwings' traffic and fleet are now progressively being transferred to the lower-cost Eurowings - the umbrella brand for the group's LCC operations. Germanwings/Eurowings achieves a RASK premium compared with other European LCCs. However, its low margin suggests that this is not enough by comparison with its CASK, which will remain higher than those of other LCCs.