(Repeats story from Monday)
By Victoria Bryan
BERLIN, March 30 After an already troubled first
year as CEO of Lufthansa, Carsten Spohr must now deal
with the aftermath of the Germanwings disaster whilst making the
airline group fit to compete for the future.
The crash in the French Alps, believed to have been
deliberately caused by co-pilot Andreas Lubitz, happened while
Lufthansa is trying to halt declining ticket prices, expand
low-cost operations, reduce staff costs and bring an end to a
series of pilot strikes.
Spohr, a qualified pilot, has been trying to follow the
example of rival IAG, the parent company of British
Airways, Iberia and Vueling, by cutting staff costs to make
Lufthansa more competitive.
But the resulting strikes since April had already cost the
airline over 200 million euros ($216 million) in lost profit and
distracted management attention from restructuring measures.
Lufthansa says it needs to bring its costs down so it can
compete with short-haul rivals Ryanair and easyJet
, as well as the likes of Emirates and Turkish
Airlines on lucrative long-haul routes.
But Spohr has said it is too soon to discuss strategy after
last week's crash, which killed all 150 people on board a flight
of Lufthansa's budget subsidiary, stressing that the airline's
focus is on taking care of the victims' families and friends.
Safety will continue to be paramount. "Our pilots are and
will continue to be the best in the world," the visibly shaken
CEO said after the revelations of investigators last week.
Spohr, who joined Lufthansa as a manager in 1994 and ran its
cargo and passenger units before becoming CEO last May, drew
condemnation on social media for his initial refusal to
reconsider cockpit regulations after the crash.
But since then the 48-year-old has mostly impressed with his
honest, measured comments.
Despite his background in management at Lufthansa, he has
regular simulator sessions to maintain his captain's licence for
an Airbus A320, the type of aircraft that crashed last Tuesday.
Independent aviation consultant John Strickland said this
training, which he shares with the ex-pilot boss of IAG, was
relevant in such an event. "Like Willie Walsh of IAG, this means
he understands the technical procedures and processes and it
adds weight to his knowledge and gives him gravitas," he said.
The tragedy sent shockwaves through a company that prides
itself on the rigorous selection and training of its pilots, and
analysts said it is crucial for Lufthansa to focus on its safety
credentials as it tries to reassure customers.
Shares in Lufthansa hit four-month lows last Thursday after
a French prosecutor said Lubitz had locked the captain out of
the cockpit and set the plane on a course to crash into the
But industry watchers note the disaster seems to have been
caused by one man, who prosecutors say hid his illness from his
employer, rather than any wilful negligence or technical
failings on the part of the airline. This means the reputation
and image of Lufthansa shouldn't take too much of a hit.
The pilots' union strikes not only irritated customers, but
also angered other staff, who feel they have made sacrifices to
bring costs down that the pilots refused to accept.
Gerald Wissel, head of the Hamburg-based Airborne
consultancy, said the catastrophe was bringing the
120,000-strong workforce together. "Spohr could use the return
of this solidarity to put Lufthansa on a new footing, to put the
focus back on traditional qualities such as safety, quality and
reliability," he said.
The crash initially raised questions about whether Lufthansa
should continue with its budget expansion, which involved
Germanwings taking over short haul flights from all but its two
main German hubs, Frankfurt and Munich.
After determining costs at Germanwings are still not low
enough to compete, Spohr has decided to expand regional carrier
Eurowings and is even making a foray into low-cost long-haul.
Strickland said Lufthansa had to press on. "It was a big
step to use Germanwings for European short-haul flights outside
of Frankfurt and Munich and that commercial side of the business
has to continue," he said.
Still, the financial consequences of the crash could add to
difficulties for Lufthansa, which has scrapped its dividend,
capped investment budgets and delayed taking new planes as it
struggles to finance over 30 billion euros' worth of new orders.
The crash caused it to halt a roadshow for a debut hybrid
bond and lawyers have warned that Lufthansa could be facing
The carrier has already provided up to 50,000 euros per
passenger in immediate financial assistance, compared with the
initial $5,000 provided by Malaysian Airlines after the downing
of MH17 over eastern Ukraine in July last year.
While some of the families who have spoken to media say it
is too early to think about legal claims, lawyers say an out of
court settlement is likely.
German lawyer Elmar Giemulla said families in these cases
typically come together to negotiate with the airline.
"You can only achieve a settlement with negotiations and
understanding from the other side and I believe Lufthansa does
have understanding for the next of kin," he said.
($1 = 0.9243 euros)
(Additional reporting by Peter Maushagen and Reuters TV;
editing by David Stamp)