Lufthansa's new CEO outlines the German carrier's new plan to attract more price conscious travellers while battling competition. But after another profit warning Joanna Partridge looks at the airline's chances of success.
They're facing competition on several fronts - from low-cost carriers and Middle Eastern airlines. But Lufthansa's new CEO Carsten Spohr has a plan for the German flag carrier. He needs to win over travellers - and investors. A profit warning last month wiped $2 billion off Lufthansa's market value in a single day. Lufthansa predicts lower than expected profit in 2014 and 2015. Short-term measures to make up for that include offering fewer seats in winter than originally planned. And earlier in the week it signed a partnership deal with Air China to improve its position in Asia. Europe's largest airline by revenue is also looking into launching low-cost long-haul flights under a new brand. SOUNDBITE: Carsten Spohr, CEO, Lufthansa, saying (German): "We can see increasing need for non-stop flights for private travellers or also in the price-sensitive segment, there is interest primarily from the German market but also from Lufthansa's other European markets. In order not to endanger the premium promise of the Lufthansa brand, we think that a second brand, like we have built up with Germanwings on short-haul routes, would also be successful for long-haul." It's all part of a push to attract more leisure travellers with lower cost tickets and no-frills services. So it will expand its low cost offerings under a "Wings" holding group. The airline is already expanding its Germanwings brand to take on short-haul traffic within Europe and now plans to expand its Eurowings regional airline. John Strickland, an independent aviation consultant, says that could be confusing for passengers. SOUNDBITE: John Strickland, Independent aviation consultant, JLS Consulting, saying (English): "If you introduce a second company within a wider legacy group such as Lufthansa, you add complexity, there's confusion in the marketplace for customers, there's extra complexity which adds costs and inefficiency to the running of the business." Lufthansa isn't the only legacy carrier that is suffering in the face of heightened competition. Air France-KLM also gave a profit warning this week, blaming overcapacity and cargo woes.