The Lufthansa Group is a European airline group consisting of a conglomerate of airlines and segments. Recently, it has hinted at a structural shift, but let’s take a look at how the group works today…
What is the Lufthansa Group?
The Lufthansa Group is not just a combination of airlines. The group operates in three distinct segments:
- Network Airlines
- Aviation Services
Under the Network Airlines branch of the group, headed by Harry Hohmeister, Chief Commercial Officer Network Airlines, are three airlines. These are Lufthansa, SWISS and Austrian Airlines.
Under the Eurowings branch is, of course, the Eurowings group. And the Aviation Services segment is responsible for logistics, MRO, catering and additional businesses and group functions, according to the Lufthansa Group website.
The aim of the group is as follows:
“As a leading European airline group, the aim of the Lufthansa Group is to take on a key role in shaping the global aviation market and to remain the first choice for shareholders, customers and employees in the future.”
The Lufthansa Group works the same as other registered German companies.
It has an Executive Board which takes care of defining the company strategy. At the head of the Executive Board is the CEO, Carsten Spohr. The Executive Board is advised by the Supervisory Board before it makes any decisions.
They work together to create impactful opportunities for the company, like shifting the corporate structure. This happened earlier this year as we reported on how the Lufthansa Group was striving for modernization after it recorded disappointing results for H1 of 2019.
Who are the Network Airlines?
Lufthansa Group acquired SWISS in 2008 and Austrian Airlines in September 2009.
The Network Airlines work independently of the group. The Lufthansa Group says that those airlines have their “own profit and operating responsibility”. But the airlines are managed by the members of the Supervisory Board who preside over their operations. They operate under the Lufthansa Group, but independently on day-to-day operations.
Eurowings is a separate entity in the Lufthansa Group. It includes low-cost airline Eurowings as well as Germanwings. Before the Lufthansa Group acquired Eurowings, Eurowings owned Germanwings.
The entire Eurowings segment is now made up of Eurowings, Germanwings, Eurowings Europe and Brussels Airlines.
In addition to the Network Airlines, the Eurowings segment of the Group is designed to offer more choice to customers. Eurowings offers a low-cost alternative to air travel. It also allows the Group to offer alternative routes, which permits the whole Group to deliver a more diverse international network.
These factors are what make up the Lufthansa Group’s success. The Group says:
“The aim is to consistently exploit potential synergies around the core of the Lufthansa Group.”
Success in the Lufthansa Group
The Group is constantly focused on delivering on price as well as providing excellent quality. Recently though, it has been hit with the rise of budget airlines which has hampered its profits.
In the first half of this year, Lufthansa Group was recorded to have lost over €100 million. Despite that, the Group’s overall revenue is growing at 3% year on year.
Mr Spohr has since suggested a modernization of the structure of the group in order to boost profits. In addition to this, the Group is hoping to continue to grow as it looks at opportunities in Slovenia and Italy.
So while this is how the group works today, in the future, it’s looking likely to change.
What do you think of the Lufthansa Group model?