Restart against customer frustration
No sale: Lufthansa “Pearl” remains in the group
May 7, 2024, 5:10 p.m
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Strikes, service deficiencies and an exodus on the board – the recent turbulence at Lufthansa is causing criticism from shareholders. At the general meeting, CEO Spohr tried to take countermeasures. A “pearl” remains in the portfolio and customer satisfaction should be improved.
Lufthansa boss Carsten Spohr has initially ruled out a new attempt at a partial sale or partial IPO of the maintenance subsidiary Lufthansa Technik. “The technology is and remains a pearl in Lufthansa AG’s portfolio,” said Spohr at the general meeting in response to questions from shareholder representatives.
They had criticized the fact that, after long consideration and negotiations, Lufthansa had abandoned the plan at the end of last year, which would have been interesting from the perspective of the capital market. Spohr added that Lufthansa’s assessment of keeping the promising maintenance business completely itself will not change “in the foreseeable future”. A partial sale did not take place because no investor met all three of Lufthansa’s conditions: bringing in new strategic business options, common decision-making rules according to Lufthansa’s ideas and what they considered to be an attractive price.
Finally end service chaos
After massive strikes and under renewed leadership, Lufthansa also wants to serve its often annoyed customers better in the future with more team spirit. Chaos in service and processes was an important topic at the MDax Group’s general meeting.
For example, the two large German fund companies DWS and Deka Investment warned that the “service chaos” was damaging the brand with the crane. “Lufthansa needs customers, and satisfied customers,” emphasized Hendrik Schmidt, an expert in good corporate governance at the Deutsche Bank subsidiary DWS, the third-largest shareholder with just under 1.5 percent.
Spohr and supervisory board chairman Karl-Ludwig Kley were aware of the problem. “We know very well that we have sometimes strained the patience of our customers,” said Spohr and promised to “do everything in our power” to deliver a premium offer to customers again. A task force was founded to improve the processes. The largest fleet and equipment modernization in the company’s history, with which 250 new aircraft and 31,000 new comfortable seats will be installed in all classes in the coming years, is also aimed at a better flight product. Kley admitted that there are still home-made weaknesses in the service app and communication in the company.
Kley: Unions partly responsible for chaos
The head of the supervisory board also blamed the unions for disruptions and annoyance among passengers. Verdi in particular had waged a tough tariff battle at the airline and at airports, which cost Lufthansa 450 million euros through flight cancellations or customer departures. The high number caused a shock in the company, which was intended to bring everyone to their senses, explained Spohr. Verdi implemented significant wage increases – one argument for this was to make the work attractive for enough highly motivated employees.
“For me, moderation and balance have been lost in these labor disputes,” criticized Kley. The tone was as rough and characterized by half-truths or lies as on social networks. The social partnership is in danger. “The company is all of us,” appealed the chief controller. “We should fight for solutions, not fight against each other.”
Lufthansa makes new concessions at ITA
Katharina Berndt from the flight attendant union UFO warned that investments must be made in employees in order to offer customers quality. “It always takes two to argue,” said Arne vonschneidmesser, deputy head of the Cockpit pilots’ union. The employer provoked labor disputes with a hard line. “We must now shape future success together,” he demanded. The VC sees the break in the board as an opportunity to set a new course.
The fact that Lufthansa has not yet received the green light from the EU Commission to take over the Italian state airline ITA Airways, which was agreed almost a year ago, is raising eyebrows. Lufthansa made further proposals on Monday to address competition regulators’ concerns, which are now being examined. A decision should now be made by July 4th.