Lufthansa to dismantle and then rebuild itself

[crlhub]

Important LH group news(sorry in French only):

http://www.air-journal.fr/2012-02-11-lu ... 44171.html

[airazurxtror]

This article is worth reading, I think, and not only as regards BMI.
A partial translation :


Lufthansa will partially dismantle and then rebuild itself.
German airline Lufthansa plans to save 1.5 billion euros annually by 2014 through a program of large-scale restructuring, which will pass through a "partial dismantling and reconstruction" of the entire group.
Are referred to through this dismantling its subsidiaries, Austrian Airlines, Brussels Airlines, Germanwings, Swiss International Air Lines and other regional affiliates and partners. To save costs, and according to an article in the newspaper company has internal Lufthanseat Friday, February 10, it will strengthen cooperation between them to avoid duplicate lines Among other measures, the administration will be streamlined with services such as purchasing, which will be centralized.
The cash released by these measures will be used for fleet renewal, as well as human resources.
"One thing is certain, we must get out of our current comfort zone, and don't be afraid of tingon the table some so-called taboo subjects" .

[cathay belgium]

hi,

as for now nobody can confirm that sn is a lh subsidary... almost but so long as they don't take the full stake or the majority of the shares, LH has little to say about SN, altough SN will react if they already do...
but aviation on the move I guess.. a whole different landscape in a few years, LH XL,L,M and S...
or LH,LX,SN and 4U ?

cxb

[tolipanebas]

With their previous cost cutting plan CLIMB 2012 just ended, Lufthansa now starts a new cost cutting program (LH seems to be almost continuously having some cost cutting programs, BTW, which is part of their steady success) and this time they are not going to focus on the operational aspect of their business (which was what CLIMB 2012 was all about) but they will now look at their overhead and back offices, which are likely in need of some restructuring indeed after all the acquisitions/spin offs they have done over the past few years.

It has been my personal belief for a long time that all too many duplicate departments are working alongside eachother in the different HQs and I'd expect a lot of overlaps to be eradicated over the next few years, freeing up a lot of cash to invest in what this business is all about: strengthening the fleet and network of Europe's biggest airline even further.

If I am to give just one suggestion: let them start with IT: there's really no need not to have a fully integrated IT department for the entire group and success in this field should become visible not only to those working for the group but also to occasional customers by seeing identical websites for all of the group's airline brands for instance (apart from their name and corporate colours, of course).

[Boeing767copilot]

Also on:
http://www.flightglobal.com/news/articl ... me-368072/

[sn26567]

The original article in French also mentions the bad situation of Austrian (OS), which is not able to become profiyable ever since it was purchased by LH. Although the LH plan does not mention OS, the rupours say that LH could sell all or part of OS if profitability does not increase fast.

This should sound as a warning to SN...

[Air Key West]

An article in the German weekly magazine "Wirtschaftswoche" (Weekly Economy) states, in short, that :
The savings program SCORE will affect all airlines and all departments;
Management will also be affected (will LH convince SN to get rid of one of the two CEO's ?)
LH wants a leaner administration for all airlines concerned
Franz says they have, in future, to be able to look more after their customers than after themselves.
Personal comment, if I am allowed to : Well, good that Franz says this will apply in the future, because imho, in the recent past, LH has looked more after itself than after its customers when they installed the new, to me as you will probalby already know, very unconfortable slim seats to improve capacity and revenue at the cost of passenger comfort.
Franz says the LH Group has to get out fo its "comfort zone" (I presume he means by that the comfortable situation the airlines and employees have generally enjoyed). European pax have already gotten out of the comfort zone !
Full article in German only (sorry) :
http://www.wiwo.de/unternehmen/handel/s ... 95684.html

[Flanker]

Let's add some drama.

LH, AF and co have to re-build their companies from the ground up.
Back-offices and overhead are not the big issue here.

If I were CEO of such a big group, I would think bigger.
The solution is simple and obvious, they just don't see it.

LH and AF will go down if they don't radically change their way of working.
I'm not even talking about operating models like LCC or longhaul or narrowbody.

It's a lot more obvious than that.
But hey, relax, it's not like I'm going to just post a 50 billion euro solution for free on the internet.

People are so busy looking at the small things about selling seats in aluminium cans that they forgot the big picture.

[euroflyer]

Let's add some drama.

LH, AF and co have to re-build their companies from the ground up.
Back-offices and overhead are not the big issue here.

If I were CEO of such a big group, I would think bigger.
The solution is simple and obvious, they just don't see it.

LH and AF will go down if they don't radically change their way of working.
I'm not even talking about operating models like LCC or longhaul or narrowbody.

It's a lot more obvious than that.
But hey, relax, it's not like I'm going to just post a 50 billion euro solution for free on the internet.

People are so busy looking at the small things about selling seats in aluminium cans that they forgot the big picture.

Hm, you know, in real life you have to do it with many little steps .. if you have a company like LH, AF or any other really big company you cannot just say "hey guys, forget everything we have got and lets start on a green field again". You have thousands of employees, hopefully millions of customers and many people you have contracts with for one or the other services. If you want to implement changes you need to show all of them what the very individual effect on them will be and why it is necessary. You need to convince them all and take them along on your journey to become more profitable. To paint the picture how everything needs to be in order to be more profitable is the very, very easy part. Believe me, all the top managers can do that easily (even if some consultants still make lot of cash with that because management needs a 'neutral' source for some messages sometimes). The difficult task is to actually make change happen. And that usually only can be done step by step and you have to overcome many many hurdles

[airazurxtror]

Lufthansa in 2011 recorded an impairment charge of € 13 million on its stake in SN Airholding. This is 20% of its initial investment of 65 million euros.
(Trends : Lufthansa boekt waardevermindering op belang in Brussels Airline)

http://trends.knack.be/economie/nieuws/ ... 499096.htm

[telspace2005]

I don't feel sorry for those already or soon to be bankcrupt airlines, specially from Europe.
The day those airlines will remember that they are carrying human beens, with the minimum of respect, that will be the beginning of a new era.
You have a better experience flying Y class on QR or SQ that on C class on SN, LH, etc...
More and more passengers bring their own food on board those days, because what they serve you....!
Above all is the ripoff of the Miles programs. Bookin a SN roundtrip flight from BRU to Berlin end of november had cost me 82,00 Euros. Booking with Miles & More on the same dates and flights would have cost me 30.000 miles and 132,00 Euros.
Funny world.

[me109]

Let's add some drama.

LH, AF and co have to re-build their companies from the ground up.
Back-offices and overhead are not the big issue here.

If I were CEO of such a big group, I would think bigger.
The solution is simple and obvious, they just don't see it.

LH and AF will go down if they don't radically change their way of working.
I'm not even talking about operating models like LCC or longhaul or narrowbody.

It's a lot more obvious than that.
But hey, relax, it's not like I'm going to just post a 50 billion euro solution for free on the internet.

People are so busy looking at the small things about selling seats in aluminium cans that they forgot the big picture.

Flanker, when I read your comments I am about 100 % that you do not have any idea how such a big group like LH or Af is managed. You should know that even if you are the CEO you can not take decision like that.
There is existing something like the board of directors and there are shareholders.
A ceo has targets , has commitments and when talking about cutting costs it will be not always the easy decisions like you talk about.
And posting a 50 billion euro solution for free , I only can laugh with that because you do not have that.

[tolipanebas]

Oh, but then Flanker, aka NCB, always knows it better...

A small overview of his most brilliant ideas from the past:

- serve all of the AFI destinations of SN with normal A319s so as to up the frequencies.
Oh wait, those planes are in fact payload/range limited in real world ops to central Africa from BRU.
Well, give them a low density dedicated seating then and introduce such service on EU routes too.
Who cares corporate customers in the EU won't pay for it, let's target dentists and architects then!
Oh, and we use a fleet of Beechcraft to fly around catering in AFI to save on wait and galley volume on the A319s in order to push them to their limits, I almost forgot the best!

- get rid of all jets and use Q400s on EU routes, including on feeding routes like CDG.
Who cares about the operational limitations of those planes, like for instance a max cargo hold weight of just 1500 kg, or about 20kg per pax....
And forget about the fact Q400 ops with a very basic product are in conflict with the premium service introduced on those very same EU routes in the wake of the A319 to central Africa plan from above...

The bigger picture, was it? Sure....

Criticising is the easy bit, offering workable solutions much more difficult: with such a past track record (see above) I fully understand NCB stopped trying to do the second part, but sadly he has compensated by increasing the first.

[regi]

Oh, and we use a fleet of Beechcraft to fly around catering in AFI to save on wait and galley volume on the A319s in order to push them to their limits, I almost forgot the best!

- get rid of all jets and use Q400s on EU routes, including on feeding routes like CDG.
Who cares about the operational limitations of those planes, like for instance a max cargo hold weight of just 1500 kg, or about 20kg per pax....

Euh, did the Beechcraft suggestion not come from me? Or did I say Skyvan?
I think NCB did not put a name on the turbo prop to transport the catering around. But we may assume that it is the Q400
The link here under shows how a Q400 delivers catering
http://www.google.be/imgres?q=q400&hl=n ... 29,r:3,s:0

[Flanker]

Oh, but then Flanker, aka NCB, always knows it better...

A small overview of his most brilliant ideas from the past:

- serve all of the AFI destinations of SN with normal A319s so as to up the frequencies.
Oh wait, those planes are in fact payload/range limited in real world ops to central Africa from BRU.
Well, give them a low density dedicated seating then and introduce such service on EU routes too.
Who cares corporate customers in the EU won't pay for it, let's target dentists and architects then!
Oh, and we use a fleet of Beechcraft to fly around catering in AFI to save on wait and galley volume on the A319s in order to push them to their limits, I almost forgot the best!

- get rid of all jets and use Q400s on EU routes, including on feeding routes like CDG.
Who cares about the operational limitations of those planes, like for instance a max cargo hold weight of just 1500 kg, or about 20kg per pax....
And forget about the fact Q400 ops with a very basic product are in conflict with the premium service introduced on those very same EU routes in the wake of the A319 to central Africa plan from above...

The bigger picture, was it? Sure....

Criticising is the easy bit, offering workable solutions much more difficult: with such a past track record (see above) I fully understand NCB stopped trying to do the second part, but sadly he has compensated by increasing the first.

I know it better than you? Of course I do, duh

By the way, I love the Africa catering concept.
It would solve the marginal problem of return catering. Marginal, because it's a problem in your imagination only, the A319's have sufficient galley space to tackle the problem.

I wouldn't go for a Beechcraft or a Skyvan but if it's deployed in a major capacity, I would tend to go for a cargo configured Fokker 27/50.
The advantages? Countless:
-The production cost for catering in Africa would be up to 75% lower, by itself sufficient to cover the extra costs of transport.
-a catering package for a A333 weighs anywhere between 600-1500kg one-way (depends of amount of meals served, extra for meal choices, duration of flights for amount of drink, etc...). For an A319 it would be less than half that. Empty trolleys of the outbound leg also weigh extra on the return leg. This not only weighs extra, resulting in higher fuel burn, but it also reduces the available payload.
-Between catering runs, the cargo configured Fokkers can be used to forward cargo. This can develop into a major network given limited local road and railway infrastructures. Some catering could also be distributed to third party airlines but also under contract to other interested non-aviation companies who want reliable and quality-controlled food in the middle of the jungle.
-I don't know about you but the idea of return catering is disgusting. The food is served 15 to 20 hours after being prepared, no matter how much ice or dry ice you put into those trolleys, you can't avoid food degradation. Plus on the way back, the empty trays of the outbound leg start to smell...

The Q400's can also be configured with 3-abreast premium class, how could you not know that?


The bigger picture is a totally different concept though.
I'll share it with whomever can throw a few billions on the table, heck I would even help with the implementation.
Actually, I'm surprised that no one thought of it before or even entertained the possibility, but for an airline the size of LH and its group, the savings would be so huge that it would be ridiculous. Forget back-office savings and small salary cuts. I'm talking hundreds of millions if not billions a year.
I have to admit that it's out of the box thinking, but it only shows how little thinking is done by airline CEO's nowadays. I have shared the idea with some of my close aviation friends and boy were they surprised that they never thought of that. Most importantly, it would create extra jobs and no one would lose from it except smaller competitors.

My mailbox is open, but first I need to see the cash.