ATW Daily News

Lufthansa forced to prepare for falling demand, unsettled employees

Tuesday July 15, 2008

Lufthansa Chairman and CEO Wolfgang Mayrhuber told ATWOnline at last week's Star Alliance meeting in Cairo that "we face heavy headwinds and will have a very close look at capacity for the coming winter schedule," with several options for reductions already available should demand weaken.

"Thanks to our writeoff policy [after 12 years aircraft are written off the balance sheet], we can ground in a worst-case scenario up to 80 aircraft without suffering cash losses in terms of leasing contracts," Mayrhuber said. LH owns 80% of its fleet.

He was hesitant to compare the current market environment to post-9/11, when demand evaporated. "The demand is here," he said. "But now the important part is creating good yields based on high fuel prices."

LH also still faces labor troubles, with the membership of the ver.di union, which represents ground staff and cabin crew, scheduled to vote on a strike this week. The airline has raised its wage increase offer to 7.7% over 21 months from 5.5% over 18 but still has not met ver.di's demand of 9.8%.

"We have a scenario where unions peg their demands on results from the past. But we have to look to the future, and we see that alarm bells are ringing in this industry," Mayrhuber said. He warned that high demands could lead to job losses and promised that "these discussions will be more intensive than in the past."

by Kurt Hofmann

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