Deutsche Lufthansa to cut 4,000 jobs, raises profitability targets

By Sonja Wind

  Deutsche Lufthansa AG plans to cut 4,000 administrative jobs by 2030, the steepest reductions at Europe’s largest airline group since the pandemic ravaged the industry, as the carrier seeks to improve its profitability. 

The job reductions will occur through digitalization, automation and process consolidation, with a majority of reductions in Germany, according to a statement ahead of the company’s capital market day Monday in Munich. The move is expected to generate about €300 million in annual savings, Lufthansa predicted. 

Lufthansa is embarking on the most extensive savings plan in years as the company grapples with the fallout from strikes, slow aircraft deliveries and an underperforming mainline airline that’s weighing on results. Last year, the group was forced to lower its guidance twice and it fell short of its medium-term margin targets laid out in 2021. 

 

For the latter part of the decade, Lufthansa said it’s now seeking to achieve free cash flow of more than €2.5 billion ($2.9 billion) from 2028 to 2030, and an adjusted return on capital employed of 15% to 20%. The adjusted operating margin will stand at 8-10% in that time frame, Lufthansa said. 

Lufthansa rose as much as 9 cents, or 1.2%, to €7.8 in early trading in Frankfurt. Before today, the stock had gained 27% in value this year. 

Chief Executive Officer Carsten Spohr has already instituted some organizational changes, including bundling hub airline operations. The airline now once again faces a renewed threat of labor unrest, with pilots set to conclude a strike vote on Tuesday through Vereinigung Cockpit union. The move potentially sets the stage for fresh walkouts that could disrupt operations and financial performance.  

Ongoing delays in aircraft deliveries are meanwhile pushing back Lufthansa’s fleet renewal and transition to more fuel-efficient models. The rollout of the new Allegris premium cabin is facing hurdles. Certification for its business-class seats on the Boeing 787-9 is still pending, forcing the carrier to keep the seats blocked off from passengers until approval.  

Lufthansa said it expects to add more than 230 aircraft by 2030, including 100 long-haul jets. 

Beyond passenger flights, Lufthansa is also leaning on growth in its other divisions. Lufthansa Technik, its aircraft maintenance arm, is expanding into the growing area of defense, while its cargo unit is seeking to become a global top-three air freight carrier.