The Japan Times - Germany's Lufthansa to slash 4,000 jobs as headwinds mount

Hit by walkouts, aircraft delivery delays and rising costs, Lufthansa's earnings tumbled by a fifth in 2024 and profitability has fallen behind its leading European rivals.

The news comes against a bleak backdrop for Europe's biggest economy, which is struggling to recover from a long downturn that is weighing on many of Germany's leading companies.

The job cuts, to be carried out by 2030, will mostly be in Germany, targeting administrative roles rather than jobs such as pilots and cabin crew.

Lufthansa -- which operates Eurowings, Austrian, Swiss and Brussels Airlines and has acquired a stake in Italy's ITA -- said it was targeting savings of some 300 million euros ($350 million) between 2028 and 2030.

The group is aiming to increase cooperation among different parts of the sprawling group.

"In particular, the profound changes brought about by digitalisation and the increased use of artificial intelligence will lead to greater efficiency in many areas and processes," it said.

The group employs around 103,000 people.

- 'Drastic cuts' -

Trade union Verdi, which represents Lufthansa office staff, vowed to fight the "drastic cuts".

It blamed in particular rising costs facing the aviation sector, from airport charges to new environmental rules.

"German and European aviation policy bears a large share of the responsibility for this development," said union representative Marvin Reschinsky, urging the German government to take action to help the sector.

Lufthansa had enjoyed bumper profits for a long period after the Covid pandemic as travel demand roared back.

But 2024 proved a difficult year as staff staged a series of walkouts to demand higher pay to compensate for inflation while operating costs continued to rise sharply.

The group issued two profit warnings last year and launched a turnaround programme at its flagship carrier.

Its closely watched operating profit margin slipped to 4.4 percent, behind those of key European rivals IAG and Air France-KLM.

On Monday Lufthansa set new financial targets for 2028-2030, including a margin of eight to 10 percent -- but analysts immediately suggested its goals were overly ambitious.

More problems loom. Lufthansa pilots have been voting on whether to stage a strike after pay talks failed, with a result on the ballot expected Tuesday.

Beyond the aviation sector, other leading companies in Germany, particularly in the auto sector, have been announcing job cuts as they contend with high manufacturing costs and growing competition from China.

S.Yamada--JT