By Ilona Wissenbach and Joanna Plucinska
FRANKFURT (Reuters) – Lufthansa aims to revive its flagship airline by 2026, as one of Europe’s biggest airlines struggles more than its regional rivals with higher costs and lengthy delivery delays of Boeing (NYSE:) planes , said the CEO.
Carsten Spohr described the Lufthansa airline as the German group’s “problem child” and said turning it around is a must for the success of the wider company.
“(It is) a clear goal that the Lufthansa airline will once again be our flagship for its 100th anniversary in 2026,” he told reporters at a briefing late on Monday.
The comment comes as investors are concerned about the group’s third-quarter results due on October 29, with shares down 10% in the past six months.
Lufthansa, which also counts Austrian Airlines, Swiss and Eurowings among its airlines, has already issued two profit warnings this year, as rising wage costs, pressure on ticket prices and a difficult aviation market make for a difficult recovery.
The delayed delivery of much-needed new aircraft is exacerbating ongoing problems, Spohr said, adding that Lufthansa has been hit “disproportionately.”
“We just got caught at exactly the wrong time, just (when it came to fleet modernization),” Spohr said.
Lufthansa is still waiting for the arrival of 41 new Boeing aircraft, with the 777x jets on order already facing years of delays.
That has forced the airline to continue using the older Airbus planes that the group had hoped to retire before the pandemic, Spohr said, hurting its ability to expand services on profitable routes and increase efficiency as newer aircraft use less jet fuel.
“We are flying 23 aircraft that we didn’t want to fly anymore,” he said.
Other European airlines, including Ryanair, have also been affected by Boeing’s long delivery delays.
FINANCIAL STABILITY
One way to revive Lufthansa’s fortunes is to invest in further international growth, Spohr said, including its stake in Italian airline ITA Airways.
Lufthansa has faced competition on its transatlantic and Asian routes and recently canceled its flights from Frankfurt to Beijing as Chinese airlines increased capacity.
The country’s airlines have been gaining market share on international routes as foreign airlines are deterred by weak Chinese travel demand, rising costs and longer flight times as they avoid Russian airspace due to the conflict in Ukraine.
Lufthansa has said it hopes to expand into newer regions, including Latin America and Africa, where it could have a bigger advantage. New hubs with lower costs, such as in Italy, are also attractive ways to strengthen sales and increase margins.
