The Executive Board of Deutsche Lufthansa AG has approved a second set of measures as part of its restructuring program. The first set of measures, released in early April, included a reduction of the fleet by 100 airplanes, as well as the decision not to resume fights by Germanwings.
Following the approval by Lufthansa shareholders of the stabilization measures of the German federal government and the commitments made by the governments of Austria and Switzerland,
Deutsche Lufthansa AG’s financing has been secured after the shareholders’ approval of the stabilization measures taken by the German federal government, as well as the commitments from the governments of Austria and Switzerland.
The complete repayment of government loans and investments, including interest payments, could however become a burden for the company in the future; cost reductions could well be foreseen in the short term.
The restructuring plan called “ReNew” is scheduled to run until December 2023 and will be directed by Detlef Kayser, Member of the Lufthansa Group Executive Board.
Some of the resolutions adopted by the Group Executive Board are:
- Following the downsizing of the Executive Board of Deutsche Lufthansa AG, the executive board and management bodies of the subsidiaries will be reduced in size compared with 2019. In a first step, the number of board members was reduced by one position each at Lufthansa Cargo AG, LSG Group, and Lufthansa Aviation Training.
- Government loans and equity participations are to be reduced as quickly as possible to avoid a further increase in interest charges (restructuring program element “RePay”).
- The number of leadership positions throughout the Group will be reduced by 20 percent.
- The administration of Deutsche Lufthansa AG will be reduced by 1,000 positions.
- The process of transforming Lufthansa Airline into a separate corporate entity is being accelerated.
- The already planned reduction of sub-fleets and the bundling of flight operations will be implemented. This measure includes the long- and short-haul leisure business at the Frankfurt and Munich hubs. At Lufthansa alone, 22 aircraft have already been phased out ahead of schedule, including six Airbus A380, eleven Airbus A320 and five Boeing 747-400 aircraft.
- The financial planning up to 2023 provides for the acceptance of a maximum of 80 new aircraft into the Lufthansa Group carriers’ fleets. This will reduce the investment volume for new aircraft by half.
There is an estimated personnel surplus of 22,000 full-time positions in Lufthansa Group. Lufthansa will continue to avoid layoffs wherever possible, but this would require agreements on crisis-related measures with unions and social partners representing the Lufthansa employees.