Lufthansa’s low-cost subsidiary Eurowings is scrapping its long haul operations in favour of short haul European flights, following an earnings warning released in a Lufthansa statement.
This move by Lufthansa comes at a time when other full-service airlines have also been questioning their LCC strategies. It seems it’s harder than they thought to compete with efficient, cost-effective airlines like Ryanair and easyJet. In a statement the airline said,
“The Executive Board of Lufthansa Group is revising its financial outlook for the full year 2019. Ongoing strong performance in long haul only partly offsets the price deterioration in Europe caused by market-wide over capacities and aggressively growing low-cost competitors”
Earlier in the year, the Lufthansa Group, which includes Lufthansa, Austrian Airlines, Brussels Airlines, Swiss and Eurowings, planned to integrate Brussels Airlines into Eurowings. They said that this would affect both short and long haul operations.
Now under a new plan, none of that will happen. Instead, Eurowings will concentrate on their short haul operations, with a view to cutting costs.
How do Eurowings plan to cut costs?
Firstly, all Eurowings long haul operations will be removed, divided amongst Lufthansa Group’s other full-service airlines.
Secondly, Eurowings will only fly the Airbus A320 family of aircraft. This will cut down on the variety of spare parts it needs. It will also simply their requirement for pilot, aircrew and mechanic skill sets.
Thirdly, Eurowings intends to keep only one AOC in Germany, rather than the four it operates now. This will make the system less complex and more efficient.
At a shareholders meeting in Frankfurt on Monday, Chief Executive Carsten Spohr told an investor conference that airline management had severely underestimated how difficult it was going to be to integrate Air Berlin into Eurowings. He said that there “was too much to do in too little amount of time”.
Lufthansa also backtracked on their plans to integrate Brussels Airlines into Eurowings. They said that a new plan for Brussels Airlines would be announced in the third quarter.
Brussels Airlines being a part of Eurowings was never a good idea
When we first heard that Lufthansa was going to incorporate Brussels Airlines into Eurowings, we thought it was a bad idea from the start.
Firstly, the very notion of it happening went down badly with the people of Belgium. They didn’t want to lose what they looked upon as being their national airline. Even some Lufthansa executives didn’t think it was a good idea to lose the Brussels Airlines name, given Belgium’s long history in Africa and the airline’s important routes.
When speaking to FlightGlobal last year, Stefan Kreuzpaintner – Lufthansa’s vice-president sales for Europe, Middle East and Africa – said,
“Brussels Airlines’ African brand must retain a Belgian flavour given the historical and cultural links between Belgium and many of the West African countries to which it operates. Flying into [Burkina Faso’s capital] Ouagadougou, for instance, I can hardly imagine flying with Eurowings – that is clear.”
Well, it now seems that his opinion is shared, as now the idea of Eurowings swallowing up Brussels Airlines has been thrown out.
Lufthansa is not the only full-service airline rethinking its LCC operation
New Air France CEO Benjamin Smith did a similarly abrupt about-face with the company’s low-cost airline, Joon. When asked about Smiths plan for Joon, an Air France source told Reuters that the former Air Canada boss “has made clear he doesn’t understand the positioning or identity of Joon,” adding “It’s a question he’s raised internally, several times.”
Joon is now officially dead and its current aircraft along with the A350’s that it had on order will be integrated into the Air France fleet.