Lufthansa Must Generate More Cash – CEO

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Published: August 5, 2012

Lufthansa management has told staff in an internal letter that the German flag carrier needs to do more to boost its cash flow, and pledged massive investments to offer more perks to passengers.

“High passenger numbers and seat load factors unfortunately say nothing about what remains in our coffers at the end of the day. And what’s there is still not enough to shoulder the investments we need to keep an edge as premium airline in the future,” chief executive Christoph Franz said in a letter to employees.

Magazine Der Spiegel quoted from the letter on Sunday and a Lufthansa spokeswoman later confirmed the reported remarks.

Lufthansa said last month that June passenger traffic in terms of revenue seat-km was up 4.9 percent and that the use of its seat capacity widened 1.2 percentage points to 81.9 percent.

Last week it pulled back further from plans to expand its passenger fleet to safeguard profits threatened by high fuel prices.

According to the letter, Lufthansa has earmarked EUR€3 billion (USD$ 3.7 billion) to improve the “product experience” for passengers.

In recent years, Lufthansa has not always lived up to the brand’s quality standards and in some areas rivals have “at least caught up” with Germany’s largest airline, CEO Franz said in the letter, which was co-signed by passenger business head Carsten Spohr.

Lufthansa is facing fierce competition from Gulf rivals such as Emirates and Etihad, which recently bought a stake in Germany’s No.2 carrier Air Berlin.

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