Wednesday 21 March 2018

Deutsche Lufthansa sets 2015 deadline for Germanwings to break even or face sale

Simone Menne, chief financial officer of Deutsche Lufthansa
Simone Menne, chief financial officer of Deutsche Lufthansa

Nicholas Brautlecht

Deutsche Lufthansa, Europe's second-largest airline, set a deadline for its Germanwings low-cost subsidiary to end losses by next year or face a potential disposal to a low-cost rival.

"We are planning a break-even in 2015," chief financial officer Simone Menne, pictured, told the Hamburg club of business journalists. "The alternative wouldn't be further losses, but if in doubt a retreat and a handover of these routes."

Potential buyers would possibly include Easyjet, Ryanair or other low-cost carriers, she said.

Lufthansa is in the process of shifting large parts of its European network to Germanwings after years of losses on shorter routes outside the main Frankfurt and Munich hubs.

Europe's former flag carriers have struggled to make money on short-haul – Ryanair and Easyjet offering lower fares, coupled with a fresh focus on service, makes them more attractive.

Germanwings is "very, very well positioned" in the domestic market as the unit manages a high frequency of flights from various regional airports, Ms Menne said. In Hamburg, Germanwings will have more competition after EasyJet recently opened a base. Germanwings will add Rome and Prague as well as Thessaloniki, Greece, and Toulouse from the city this year.

Following the worst strike in Lufthansa history last week, the management plans a "swift solution" with pilots on pension pay, Ms Menne said. Whether the expected "high double-digit million" cost from the strike will hurt full-year remains to be seen, she said.

For now, Lufthansa will stick to its target to lift operating profit to $2.65bn (€1.92bn) by 2015, Ms Menne said. The company earned $697m in operating profit for 2013, it said on March 13. (Bloomberg)

Irish Independent

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