Lufthansa CEO aims to revive ‘problem child’ airline by 2026, by Reuters

By Ilona Wissenbach and Joanna Plucinska

FRANKFURT (Reuters) – Lufthansa aims to revive its flagship airline by 2026 as one of Europe’s biggest carriers struggles more than its regional rivals with higher costs and prolonged delays in Boeing (NYSE: ), said its executive director.

Carsten Spohr described Lufthansa airline as the German group’s “problem child” and said its turnaround was a necessity for the company’s overall success.

“(It is) a clear objective that the Lufthansa airline will again be our flagship for our 100th anniversary in 2026,” he told reporters at a briefing on Monday evening.

The comment comes as investors worry about the group’s third-quarter results due on October 29, with its shares down 10% over the past six months.

Lufthansa, which also counts Austrian Airlines, Swiss and Eurowings among its carriers, has already issued two profit warnings this year as spiraling wage costs, a tightening of ticket prices and a tough aviation market make recovery difficult .

The delayed delivery of much-needed new planes is compounding ongoing problems, Spohr said, adding that Lufthansa has been hit “disproportionately” by the pain.

“We were caught at exactly the wrong time, just (when it came to) fleet modernization,” Spohr said.

Lufthansa is still waiting for 41 new Boeing jets to arrive, with the 777x on order already facing years of delays.

That has forced the airline to continue using older Airbus planes that the group had hoped to retire before the pandemic, Spohr said, affecting its ability to expand service on profitable routes and increase efficiency as newer planes they use less jet fuel.

“We’re flying 23 planes that we didn’t want to fly anymore,” he said.

Other European airlines, including Ryanair, have also been hit by Boeing’s long delivery delays.

FINANCIAL STABILITY

One way to revive Lufthansa’s fortunes is to invest in continued international growth, Spohr said, including its stake in Italian carrier ITA Airways.

Lufthansa has struggled with competition on its transatlantic and Asian routes, recently canceling Frankfurt to Beijing flights as the Chinese carriers increased capacity.

The country’s airlines have gained market share on international routes as foreign airlines are deterred by weak travel demand from China, rising costs and extended flight times as they avoid Russian airspace due to the conflict in Ukraine.

Lufthansa said it hopes to expand into newer regions, including Latin America and Africa, where it could have more of an advantage. New hubs with lower cost bases, such as in Italy, are also attractive ways to strengthen revenues and increase margins.