In an attempt to increase efficiency across business areas and activities, German airline Lufthansa has unveiled plans to increase profitability by slashing its payroll and leaning heavily on artificial intelligence, digitalisation and consolidating work among member airlines.
It’s understood that the airline group plans to eliminate a total of 4,000 full-time equivalent roles worldwide by 2030.
While Lufthansa missed profitability targets in 2024, amid a difficult year of staff strikes, increased global price competition and aircraft delays, the airline now expects adjusted operating margin to reach 8%-10% from 2028.
Adjusted free cash flow is expected to exceed 2.5 billion euros (US$2.9 billion, A$4.46 billion) annually.
Annual earnings dropped 39% to 1.65 billion euros last year, and its annual operating margin was 4.4%, below Lufthansa’s strategic target of 8%.
While most of the job losses will be from Germany, the focus - as part of a broader restructuring strategy - is expected to be on administrative rather than operational roles.
Lufthansa told the market it was moving to deepen the integration among member airlines Lufthansa, SWISS, Austrian Airlines, Brussels Airlines and ITA Airways, and is "reviewing which activities will be no longer necessary in the future, for instance due to duplication of work".
“In particular, the profound changes brought about by digitalisation and the increased use of artificial intelligence will lead to greater efficiency in many areas and processes,” the company said in a release issued during its Capital Markets Day in Munich.
Strategic restructuring presented to investors and analysts in Munich included plans to capitalise on strong demand for air travel amid limits on offerings of flights due to stretched supply chains for planes and engines.
That means a tight market that is keeping planes full and boosting revenue.
The airline is also preparing for what it describes as the largest fleet modernisation in the company's history, which would add more than 230 new aircraft by 2030, including 100 long-haul aircraft.
“Financial strength will continue to be the basis for achieving the financial targets,” says the group, adding that it will maintain a “conservative” minimum liquidity of €8-10 billion.
Along with its network airlines, the group plans to concentrate on point-to-point services through its Eurowings leisure division – which is undergoing a fleet renewal with Boeing 737 Max jets – as well as maintenance and freight operations with Lufthansa Technik and Lufthansa Cargo.
The airline’s new long-term targets should be viewed “positively” as it is better than the market expected, UBS analysts said in a Monday note.
Lufthansa is a globally operating aviation group that includes network airlines, point-to-point airline Eurowings and service companies. It had 101,709 employees in 2024 and generated revenue of 37.6 billion euros (A$67 billion).
Lufthansa shares were up 0.9% in overnight trading, with the company’s stock now up 25% since the start of the year.
