Lufthansa’s Long-Haul Route Cuts Boost Earnings at Frankfurt Hub

(Bloomberg) -- Every one of Deutsche Lufthansa AG's 70-plus long-haul routes from Frankfurt showed a profit this summer after the carrier eliminated weaker destinations including Malaysia, Venezuela and Oman from its network.

Those intercontinental services that survived the cull may now all be retained and Lufthansa will explore the possibility of keeping some older wide-body jets to boost capacity even when newer aircraft start to arrive, Klaus Froese, who runs the German carrier's main hub operation, said in an interview.

“The consolidation of our routes portfolio has led to a very good result in Frankfurt,” Froese said. A positive trend in September bookings that prompted Lufthansa to upgrade its full-year earnings forecast on Oct. 19 has continued, with “things going well” in October, he said.

Chief Executive Officer Carsten Spohr has revamped Lufthansa's long-haul operations in the face of increasing competition from fast-expanding Persian Gulf carriers, especially on eastbound routes. At the same time he has bolstered Asian links via joint venture deals with carriers from Singapore and China, where the company ended flights to Shenyang last month.

While Lufthansa has previously said that 25 Airbus Group SE A350 wide-bodies it has on order will replace less efficient A340s, Froese said it's possible those retirement plans will be reversed. “We can decide with each plane coming in if it will grow our fleet, or if we use it for roll-over,” he said.

Lufthansa said in February that its first 10 A350s would be deployed in Munich to hasten the A340's exit there, though the low oil price has made four-engine planes less of a burden. While the first A350 is slated to join the carrier by the end of this year, Airbus has been struggling to meeting delivery goals.

The airline will also evaluate the business case for operating the extended-range version of Airbus's A321neo narrow-body, Froese said. Other carriers are exploring the new model's potential for opening up so-called long, thin routes that wouldn't be viable with a bigger twin-aisle jet and the executive said it could make the distance from Frankfurt to the eastern U.S.

“We must pay attention to this,” Froese said. “We will always have the big trunk routes for our A380 and 747s, but we also must be flexible enough to fly smaller aircraft on thinner routes.” The company has 45 A321neo aircraft on order, but hasn't yet specified the LR variant with extra fuel tanks.

Lufthansa will report detailed results for the three months ended Sept. 30 on Wednesday.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net. To contact the editors responsible for this story: Chris Reiter at creiter2@bloomberg.net, Christopher Jasper, Benedikt Kammel