Catching a Breath: Lufthansa Braces for US Flight Business Slump in Q3 After a Red-Hot Summer
Anticipates a levelling off in U.S. operations for Lufthansa following a robust summer season.
Lufthansa, the German aeronautical titan, anticipates a sluggish third quarter in its US flight business, following a bustling summer season. In a recent address to the Economic Journalistic Association Düsseldorf (WPV), Lufthansa's CEO, Carsten Spohr, declared, "We'll be seeing more jetsetters on the North Atlantic this summer than in any previous year."
The Lufthansa collective touches down in the US a whopping 60 times a day. Spohr predicted a deceleration in the third quarter, especially from Europe. Despite the impending slowdown, demands in the States remain robust, and prices have been climbing steeply. As a result, Lufthansa intends to bolster its shares in the US, further banking on the US market's strength.
The success story of Lufthansa's turnaround program over the past two years continues unabated. The ultimate objectives remain: a gross result effect of 1.5 billion euros by 2026 and 2.5 billion euros by 2028. The program is aimed at more than slashing costs; it's about investing in better long-haul seating for passengers. This upgrade allows the airline to demand premium rates.
No fresh aircraft orders are on the horizon, Spohr revealed. And there will be no headline-grabbing announcements at the upcoming Paris Air Show. Lufthansa is currently deep in the thick of its largest modernization program ever, with 250 aircraft already slated for an overhaul.
Sources: ntv.de, rts
Additional Insights:
- Summer Peak: The busiest periods for air travel are usually summer months, due to family vacations and holidays.
- Higher Prices: Demand for flights originating from the United States is higher compared to travel to the U.S., leading to higher ticket prices.
- Profit Driver: The North Atlantic business stands as a primary source of profit for passenger airlines, including Lufthansa, Austrian Airlines, Brussels Airlines, Swiss, and ITA Airways.
- Restructuring Program: Lufthansa's ambitious restructuring campaign is estimated to yield an addition of 1.5 billion euros to gross profits by 2026, and 2.5 billion euros by 2028. The program encompasses improvements to long-haul seating, enabling the airline to charge higher prices.
- Fleet Modernization: Lufthansa is reinvesting in modernizing its fleet, with a focus on long-haul flight seating, to maintain its competitive edge and improve revenue over time.
- Given the anticipated sluggish third quarter in Lufthansa's US flight business, the airline is planning to reinforce its employment policy, specifically targeting the US market, in an attempt to capitalize on its robust demand and escalating prices.
- In the midst of its significant fleet modernization program, Lufthansa is also reevaluating its community policy, ensuring that the upgrades to long-haul seating will cater to a variety of lifestyles, aiming to provide a comfortable and premium travel experience for its passengers, regardless of their travel preferences.
