Lufthansa needs Eurowings to take it to greater heights after 2015's profit improvement

In 2015 the Lufthansa Group had its most profitable year since 2007, before the global financial crisis. Its profit recovery from the crisis has been cautious, but its increased confidence is now signalled with the restoration of dividend payments to shareholders, proposed at EUR0.50 per share.

Compared with its pre-crisis incarnation, one of the biggest changes in the Lufthansa Group is the establishment and growth of a low cost subsidiary with a clear strategic role. First under the Germanwings brand and now under Eurowings, the group's LCC is increasingly assuming point-to-point flying from the hub airlines on both short/medium haul routes and launching new long haul leisure routes. In 2015 it even made a small profit.

However, labour productivity in the mainline Lufthansa operation remains an impediment to the group's ability to join the leaders of European legacy airlines, in terms of profitability. Eurowings has greater labour flexibility and lower unit costs and has also become important to management as a way to show mainline labour representatives a glimpse of an alternative future. As competitor LCCs grow in Germany both management and unions must seize this future.