Lufthansa Group has announced plan for more cost cuts and delivered better-than-expected results, even as a cabin crew strike posed a further challenge to the German airline’s efforts to revive profits.
In the groups’s third-quarter earnings call, CEO Carsten Spohr said that Austrian fleet is facing “the mother of all battles” against low-cost carriers in Vienna. Besides the personal cuts, which executives have said to have primarily come from not filling vacated positions, the groups also are standardized Austrian’s fleet by replacing all Bombardier Dash 7 Q400s with Airbus A320 by 2021.
#Lufthansa workers hold protest march amid 48-hour cabin crew strike #Frankfurt pic.twitter.com/tKjT5wVMQI
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Its shares which had fallen 16 per cent in the last year, were up by 6.6 per cent at 15:15 GMT, making them the biggest gainer on the German blue-chip index. The upbeat results come after rivals Ryanair and British AIreays owner IAG gave lukewarm outlooks as the industry struggles with overcapacity and fierce competition over ticket prices. Ryanair said it expected further delays to its Boeing MAX 737 deliveries and last week IAG said strikes its pilots have held had hurt quarterly profits.
About 800 staff members to lose their jobs at the Austrian fleet in Vienna.
With Lufthansa’s cabin crew on strike over pay and pensions- which resulted in the cancellation of 1300 flights, Finance Chief Ulrik Svensson, estimates that one day of strike action would cost the company up to 10 million to 20 million euros. However, with slower growth among its competitors, the German carrier has been able to counter pricing pressure in Europe. With Adjusted earnings before interest and taxation falling by 8 per cent to USD 1.4 billion, revenues rose by 2 per cent ahead of average analyst forecasts.
Spohr cutting almost 700-800 jobs at the Austrian airline fleet, Lufthansa will seek additional annual cost savings of 90 million euros by the end of 2021 that would include staff cuts, closing decentralized bases to focus on its Vienna hub and standardizing its fleet.
