Deutsche Lufthansa sees growth in leisure unit as airline struggles

By Sonja Wind and William Wilkes

  Deutsche Lufthansa AG will rely increasingly on its leisure unit Discover and regional carrier City Airlines to bolster growth, as the German group’s flagship airline struggles with higher costs, its CEO said. 

While the post-Covid travel boom shows no sign of letting up, the core Lufthansa airline is still facing aircraft delays and labor strife that dented profits and margins last year, Chief Executive Officer Carsten Spohr told reporters in Frankfurt. 

“It is actually urgent that we succeed in closing the cost disadvantage in order to see growth again at Lufthansa Airline Classic,” Spohr said. Expansion “is not currently happening there, but rather, of course, at Discover and City Airlines, which will shoulder the bulk of the growth burden in the coming years.” 

Spohr also singled out airport fees and taxes in Germany, echoing a common complaint of airline executives across Europe. Ryanair Holdings Plc, most recently sparred with officials in Spain over such costs.  

Spohr also said capacity will grow 4% this year and backed earlier guidance for a significant rise in annual operating profit, as Europe’s largest airline group aims to reverse the 2024 slump. “This year we will also report financial results that are significantly higher than last year,” he said.  

Volatility in global markets has been a tailwind for Lufthansa’s cargo division, with more goods shipped at short notice, Spohr said. Maintenance arm Lufthansa Technik is thriving as aircraft remain in service longer and as civilian firms are increasingly tapped for defense work. 

Yet in its core businesses, Lufthansa continues to grapple with delayed aircraft deliveries, dragging out the rollout of its long-awaited Allegris premium cabins.  

Delivery of Boeing Co. 787-9 Dreamliner aircraft has been held up by certification delays tied to the new seats. Overall, the group expects to add about 60 new aircraft by the end of 2026 — nearly one per week, which Spohr touted as an unprecedented pace. 

Cost reductions will also depend on talks with Vereinigung Cockpit, the pilots’ union, which is preparing a strike ballot, with the latest clash over pensions. “We will see where the negotiations take us,” Spohr said.