Lufthansa finally wants to tackle and solve the serious operational problems. To this end, the company plans to hire thousands of new employees. Too many employees were laid off during the pandemic. The group recently returned to profitability – but only because of the freight business.
Lufthansa machines during Verdi’s warning strike: The crane airline should be able to satisfy customers again in the coming six months.
The aviation industry is recovering from the serious effects of the pandemic faster than expected. This is a blessing for the airlines, but also a bit of a curse for some. Lufthansa is a prime example of this. Although it was still negative overall in the first half of the year, it returned to the black in the second quarter.
At the same time, however, the company has disappointed and annoyed many customers in recent weeks with flights being canceled at short notice, long waiting times and considerable baggage clutter. Flight chaos is the word of summer. Too many employees were laid off during the crisis, and some of the remaining employees are deeply frustrated. Now the collective bargaining conflicts with the ground staff and the pilots are getting worse.
Staff mainly for Eurowings
Lufthansa CEO Carsten Spohr and his team finally want to tackle this problem and hire new staff. In the second half of the year, the group plans to recruit 5,000 new employees, with a similar number of new hires planned for 2023, they say. The majority of the new employees will be employed in the operational areas, with the focus on the cockpit and cabin of the subsidiaries Eurowings and Eurowings Discovery, the ground staff at the airports, Lufthansa Technik and the catering staff of the subsidiary LSG.
The new hires are sorely needed because Lufthansa has had to cancel several thousand flights in recent weeks and there is no end in sight to this development. Every fourth employee had to leave the company during the crisis. Now you can hardly keep up with the demand for flights. In addition, there is apparently a high level of sick leave – probably also, but not only because of the ongoing pandemic. The chaos in the travel market is exacerbated by the fact that the airports have also cut too many staff and can no longer cope with the onslaught of customers.
Logistics business saves passenger airlines
While empty ghost flights were still being discussed at the beginning of the year, many routes are now well utilized. The return of business and leisure travelers is in full swing. In the second quarter, the flight capacity offered by Lufthansa was already back at 74 percent of the pre-crisis level and the flights were utilized at an average of 80 percent. In the pre-crisis year of 2019, an average Lufthansa flight was 83 percent occupied. In the premium classes, the occupancy of the flights is 80 percent, even above the pre-crisis level of 76 percent. After the two tough years of the pandemic, many travelers are apparently now treating themselves to a little more comfort on business and private flights.
On the surprisingly good financial performance of the Lufthansa Group in the first half of the year made a particular contribution to the logistics business of Lufthansa Cargo. While the passenger airlines, which in addition to Lufthansa also include Swiss, Austrian and Brussels, still posted an adjusted loss of 1.2 billion euros before interest and taxes in the first half of the year (previous year –2.6 billion euros), Lufthansa Cargo achieved this a record with a profit of almost one billion euros. With an operating profit of 220 million euros, Lufthansa Technik also significantly exceeded the previous year’s result.
High booking numbers
Lufthansa boss Spohr praised the strong result, but at the same time admitted that the first half of the year was challenging for guests and employees. The airline industry has reached its operational limits worldwide. After the worst financial crisis in history, it is now a matter of consistently demonstrating the stabilization of flight operations. After the achieved return to profitability, “top products for our customers and prospects for the employees have the highest priority again”. Both groups will take Spohr at his word from now on.
Despite the high level of uncertainty caused by the ongoing pandemic, the war between Russia and Ukraine, high inflation and the stagnating economy, the Lufthansa Group expects high demand for tickets for the rest of the year. Currently, bookings for the months of August to December are already at an average of 83 percent of the pre-crisis level. Accordingly, the management would do well to quickly expand its capacities, including staff, in order to stabilize the flight schedule and satisfy customers again. An adjusted profit before taxes and interest of over 500 million euros should then be achieved for the shareholders in 2022.
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