Lufthansa has announced the immediate cessation of flight operations for its subsidiary Cityline, citing soaring kerosene costs and ongoing labor disputes. The "current crisis" has forced the company to implement this long-planned measure earlier than anticipated, explained Till Streichert, Chief Financial Officer of the Lufthansa Group, on Thursday. He acknowledged this is "a painful step, particularly for our colleagues at Lufthansa Cityline," adding that finding "continued employment opportunities within the group" is now a priority.
The airline pointed to sharply increased kerosene prices, which have "more than doubled" compared to the period before the Iran conflict. Additionally, the company faces rising "additional burdens from labor disputes," as flight operations have been severely impacted by renewed strikes by pilots and cabin crew since the beginning of this week.
As a first "immediately effective step," Lufthansa will permanently remove "the 27 operational aircraft of Lufthansa Cityline from the program starting the day after tomorrow to reduce further losses from the deficit-making airline." Additionally, four older long-haul aircraft will leave the core Lufthansa brand fleet at the end of the summer flight schedule. In a third step, short and medium-haul capacity will be reduced by another five aircraft in the upcoming winter flight plan.
This package of measures is designed to achieve a "disproportionate savings effect on fuel costs," the company explained. On one hand, particularly inefficient aircraft will be taken out of service early, and on the other, "the saved kerosene volume reduces the unhedged portion of the group's fuel requirements."
According to company figures, the kerosene consumption of the group's passenger airlines is "hedged at around 80 percent on the basis of crude oil prices, which is above average." However, the remaining 20 percent must be "purchased at the significantly increased market prices." This particularly expensive portion of fuel requirements will be "reduced by around ten percent" through these measures.
"The package for the accelerated implementation of fleet and capacity measures is unavoidable given the sharply increased kerosene costs and geopolitical instability," Streichert stated. The goal is to "focus our short and medium-haul platforms more clearly and make them more competitive," he added. "In this regard, we had already seen the prospective removal of Cityline from our program as part of our strategic development for some time, independent of the current geopolitical crisis."
Lufthansa also announced "new savings targets for staff appointments, internal events, and external consulting services" to further reduce administrative costs. These measures will support "the existing reduction target of 4,000 positions in administration group-wide by 2030."
Flight operations at Lufthansa, which celebrated its 100th anniversary on Wednesday, were massively disrupted on Thursday for the fourth consecutive day due to strikes by cabin crew and pilots. At Frankfurt Airport, most Lufthansa flights were cancelled, with similar scenes at the airline's second German hub in Munich. Many flights were also cancelled at the also-affected Lufthansa subsidiary Eurowings.
The pilot union Vereinigung Cockpit (VC) had called for industrial action at the Lufthansa core brand, Cityline, and Lufthansa Cargo for Monday and Tuesday, and then again for Thursday and Friday, in a dispute over improvements to pilots' company pension schemes.
The Independent Flight Attendants Organization (UFO) union, meanwhile, called for a two-day strike starting Wednesday. This action affects the Lufthansa core brand and Cityline as well. The labor dispute here primarily concerns the working conditions of flight attendants. Since Monday, hundreds of flights have been cancelled daily.
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