General Industry

Lufthansa Forced to Cut Costs Despite Strike Threat

By Publications Checkout
Lufthansa Forced to Cut Costs Despite Strike Threat

Lufthansa has told its workers that cost-cutting will continue, as the company's profits fell again last year.

Lufthansa and its budget operation Germanwings saw profits decrease by nearly 11 per cent to €252 million. It is struggling to compete with budget airlines in Europe and its Middle Eastern competitors such as Emirates and Etihad on long-haul flights.

Lufthansa's yields, a metric of measuring average fares, fell 3.1 per cent in 2014 compared to 2013. And chief financial officer Simone Menne has said she expects it to decrease further in 2015.

This creates a challenge for Lufthansa bosses, which has faced stiff opposition from the airline's pilots, who have threatened strike action if the planned cuts go ahead. Pilots staged 15 days of strikes last year, grounding 8,600 flights.

“We are very clear that we need further measures,” said Menne, insisting that wage cuts as well as an expansion of low-cost operations are vital to survive the competition levels.

The airline was somewhat buoyed by the reduced fuel costs in 2014, however net profit was still down 82 per cent on the previous year.