23-Apr-2012 1:30 PM

Lufthansa to halt fleet expansion and restrict capacity growth amid major cost-reduction efforts

Lufthansa director passengers services Carsten Spohr said Lufthansa will halt fleet expansion over the next three years as part of plans to improve annual profits by over EUR1.5 billion, according to Süddeutsche Zeitung reports. Lufthansa German Airlines would account for EUR900 million of the targeted improvements, with plans to reduce staff costs and negotiate lower charges at airports. "We will not go to the Supervisory Board with the proposal of selecting and ordering a modern intercontinental fleet until the above mentioned measures begin to bear fruit," Mr Spohr said in a letter to staff. He added that Lufthansa German Airlines would not increase the amount of seats available in 2012 and would restrict capacity growth to a maximum of 4%in 2013 and 2014. The carrier will cancel some unprofitable routes and eliminate the first-class product on many long-haul services while also utilising Germanwings to operate services outside of its major hubs of Munich and Frankfurt. The carrier also said it could not rule out compulsory redundancies. Ver.di union has announced opposition to the plan, stating, "we will put a stop to it" (dpa-AFX, 20-Apr-2012). 

Lufthansa: "Our return has been constantly sinking over the past years. In 2011 we only gained one percent of our turnover as profit. That this margin is not sufficient in an investment-intensive branch such as the airline industry doesn't require any further explanation," Carsten Spohr, director passengers services.  Source: Süddeutsche Zeitung, 20-Apr-2012.

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