Lufthansa To Cut 20% Of Administrative Staff In Savings Push
Europe’s largest aviation group is set to hold its capital markets day Monday in Munich.
Deutsche Lufthansa AG will cut its administrative staff by 20% across the entire group, according to a person familiar with the matter.
The job reductions won’t affect operational employees such as mechanics, cabin crew and ground personnel, the person said, asking not to be identified because the cuts haven’t been disclosed publicly.
Europe’s largest aviation group is set to hold its capital markets day Monday in Munich. Lufthansa declined to comment.
Company shares rose as much as 3.4% in intraday trading in Frankfurt, the most in seven weeks.
The staff reduction is Lufthansa’s latest move to rein in costs as it pursues a turnaround following last year’s slump in profit and margins. Earlier this month, the group said it will consolidate hub airline operations.
Still, Lufthansa continues to struggle with delayed aircraft deliveries, shaky booking patterns and higher costs from taxes and airport fees.
What Bloomberg Intelligence Says:
Lufthansa’s Ebitdar margins continue to lag European peers such as Air France and IAG, so this is a natural response to attempt to improve profitability. Yield growth has been weaker than peers as well, which has put more pressure on reducing costs. Weak German GDP growth is taking a toll, and we believe leisure demand to Germany is not as strong as the UK and France.
— George Ferguson, Senior Aerospace/Defense & Airline Analyst
The group includes passenger airlines such as Lufthansa, Swiss, Austrian Airlines and Brussels Airlines, along with a maintenance business and logistics arm.
The reductions mark a reversal from Lufthansa’s post-pandemic hiring spree, when the rebound in global travel prompted the company to add at least 30,000 employees and announce plans for about 10,000 more.
At the end of last year, the group had 101,709 employees, according to its annual report. About two-thirds of them were in the passenger airlines segment.
The maintenance, repair and overhaul business had 24,499 workers.
The job cuts were reported earlier by Reuters.
Lufthansa also faces potential strikes from the pilot labor union Vereinigung Cockpit, which is holding a ballot vote that’s set to conclude at the end of this month.
