4-May-2012 12:05 PM

Lufthansa Group to eliminate 3500 admin jobs as part of EUR1.5bn in SCORE measures

Lufthansa stated (03-May-2012) that by the end of 2014, the carrier's cost reduction programme, SCORE, is intended to improve the Group's operating result by at least EUR1.5 billion compared with 2011. Details include:

  • Lufthansa-Germanwings and Austrian-Germanwings cooperation: The measures include greater cooperation between Lufthansa and Germanwings, which, having combined frequent flyer programmes and bookings, will now also run joint capacity planning for decentralised traffic from Düsseldorf, Berlin, Hamburg, Stuttgart and Cologne. A new code-sharing agreement has also been in place between Austrian Airlines and Germanwings since Mar-2012. Meanwhile, double-digit million euro savings are also expected from the optimisation of local traffic within the airline group;
  • Group purchasing: Lufthansa intends to make sustainable savings of EUR200 million in this year alone by means of a Group-wide purchasing project;
  • Staff reductions: Costs in administrative areas are to be cut by 25%. The Group intends to realise a total of one third of the SCORE volume by reducing staff costs. This is to be achieved by merging duplicate functions and eliminating activities which create no added value for the customer, as well as by outsourcing activities to Shared Services units. These measures are expected to result in the loss of 3500 full-time jobs in administrative departments worldwide over the coming years. CEO Christoph Franz said the job reductions would be carried out using "socially acceptable" measures, which can include not replacing people who leave. But he added that cuts were unavoidable. "Only if we restructure our administrative functions and accept a workforce reduction can we keep jobs long-term and create new ones," he said;
  • Lufthansa Passenger Airlines contribution to SCORE: Lufthansa Passenger Airlines is contributing more than EUR900 million in reductions as part of SCORE, of which EUR600 million is to come from cutting costs and EUR300 million from boosting revenue. This is to be achieved partly by cancelling loss-making routes and restricting capacity growth, which has been set at zero for 2012 and a maximum of 4% for 2013 and 2014. This means that the company's fleet will not be enlarged until 2014 and new aircraft will replace older ones. By 2020, only four different fleet families should then be in service at Lufthansa Passenger Airlines. The company, which increased the share of first and business class revenue on long-haul routes from 53.6% in 1Q2011 to 54.9% in 1Q2012, said it "intends to remain the European airline with the most first class seats by far".   [more - original PR]

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