Position as leading European airline group
The Lufthansa Group is one of the biggest airlines worldwide and a leading European airline group. In this role, the Lufthansa Group aims to continue to play a part in actively shaping the global airline market. It strives to follow its mission statement: the Lufthansa Group connects people, cultures and economies in a sustainable way. In doing so, it aspires to set standards in terms of customer-friendliness and sustainability. It uses the potential of innovation and digitalisation to develop customer-focused products and increase efficiency. Corporate responsibility and identity are put into practice locally and supported by overarching functional processes that enable synergies and economies of scale. A strict focus on costs, operational stability and reliability in all areas are firmly established in the DNA of the Lufthansa Group. The safety of flight operations is and will always be the top priority.
The airlines form the core of the Lufthansa Group, with their comprehensive networks in their home markets of Germany, Austria, Switzerland, Belgium and northern Italy. In two business models – network airlines and point-to-point airlines – they serve the relevant customers and market segments with dedicated brands and differentiated service promises, connecting Europe with the world. The passenger airline business is supplemented by Aviation Services that have synergies with the airlines. The Group’s structure – with activities throughout the airline value chain – enables the maximisation of synergies between segments, while at the same time promoting the scaling of Aviation Services’ business from external markets. The aim is to continue strengthening the role of the airlines in the portfolio of business segments over the long term.
Mission Statement of Lufthansa Group
Transformation of the Lufthansa Group is to secure long-term economic success
As a result of the coronavirus crisis and the war in Ukraine especially, the aviation sector is characterised by a dynamic market and competitive environment. Exogenous sources of uncertainty, resource bottlenecks, evolving customer requirements and shifts in the value chain necessitate change, but also offer opportunities. These include significantly shorter advance booking periods than before the coronavirus pandemic, a significant increase in the take-up of sustainable products and data-based optimisation of aircraft maintenance.
The Lufthansa Group actively used the coronavirus crisis to accelerate its process of transformation and establish a good starting position in order to succeed in the future market environment. For example, the complexity was reduced by simplifying the base and AOC structure – including by ending the flight operations of SunExpress Deutschland and passenger flight operations at Germanwings. Economies of scale will thus be realised consistently and flight operations with competitive structures and a good operating performance will be scaled up.
The Group’s strategy envisages continuous transformation and modernisation of the Lufthansa Group in order to be prepared for a changed, highly dynamic geopolitical environment with significant impacts, including for supply and value chains as well as the supply of raw materials, and to be optimally positioned in the event of a high level of market volatility. The goal is to consistently act upon opportunities arising due to trends and market changes. Services, business models and organisational structures are to be continuously aligned with the complex and dynamic market environment. The aim is to safeguard the Lufthansa Group’s leading market position and economic success by developing it into an agile and flexible organisation that is even more competitive. In particular, a further increase in its customer orientation, accelerating innovation and digitalisation, corporate responsibility and sustainability, modern forms of work organisation and value-based management will ensure that the Lufthansa Group is ready for the future.
Within this long-term strategic framework, the Lufthansa Group has tactical areas of focus in line with specific internal and external requirements. For instance, one area it is focusing on in the short term is enhancing its attractiveness as an employer, both on external labour markets and in terms of internal development opportunities for talent.
In addition, the aim is to cut structural costs continuously in order to mitigate or fully compensate for the effects of inflation-related increases. So efficiency improvements in technical fleet management are being sought by pooling the fleet’s engines across the Group in future, for example, in order to maximise their useful lives and better coordinate maintenance. The productivity of aircraft and crews is to be boosted by reducing the number of aircraft types in the long-haul fleet and permanent optimisation of operating processes and the route network. Efforts are also being made to turn fixed into variable costs, in order to minimise the effects of inflation-related cost increases, seasonality and slumps in demand.
Customers are at the heart of things, fulfilling the premium claim is a key area of action
In view of changes to the structures of supply and demand, an even greater focus on the customer is a core element of the Group strategy. Customers and their individual needs and wishes are at the heart of things. With the targeted ongoing development of the product portfolio, an increasingly individualised choice of selectable product components, an improved travel experience on the ground and on board, an interactive and personal dialogue, solution-oriented and accessible customer service and rapid digital solutions throughout the travel chain, customers are acknowledged as individuals and receive tailored solutions. The entire travel experience is intended to be individual, flexible and intuitive. The Lufthansa Group’s ambition is to serve its customers as an attentive host and a contact who is reachable at any time and to offer them a hassle-free and sustainable range of services. It thus aims to forge long-term relationships with them.
In future, these goals will be achieved by means of an integrated product approach. Passengers will experience a holistically linked range of physical products, such as seating and lounges, attentive service from employees both on board and on the ground and digital travel solutions. The journey to achieve this vision encompasses three different levels of improvements and additions to the product range.
First of all, following the end of the coronavirus pandemic the company will once again flawlessly deliver on its promise as a premium provider, at every point of contact throughout the travel chain. The focus here is, in particular, on areas which are highly relevant for customers, which influence repeat purchases and which thus ensure value generation for the Lufthansa Group. Examples include ensuring stable, reliable flight operations, improvements to customer service, thanks to enhanced accessibility of company call centres, expanded digital service channels such as the chatbot and an upgraded catering offering.
In addition, the product range will be widened in line with customers’ expectations. Specifically, this means a wider choice of individually selectable relevant product components as well as an improved travel experience on board and on the ground, in the premium segment in particular. For instance, through its refit with Allegris product generation seating, Lufthansa German Airlines will offer a new travel experience in every class on long-haul routes. SWISS is also investing in this premium product, with new seats in every class on its long-haul fleets. In future, even more customers of the Lufthansa Group’s Passenger Airlines will have on-board Wi-Fi, thus enabling them to make use of new service options in the expanded in-flight entertainment system in addition to surfing and communication. The automation of customer services is also being further expanded. For instance, the digital customer portal enables customers to access all relevant information and resolve issues quickly and easily thanks to new, interactive self-service options. Digital customer services also strengthen the ability of the Lufthansa Group’s Passenger Airlines to fulfil their role as hosts on the ground and on board.
Finally, customer loyalty and personal interaction are to have a special status. In this context, the Lufthansa Group is expanding its existing, somewhat transactional concept of customer loyalty and will in future demonstrate greater individual appreciation for every passenger. Its loyalty program will be upgraded with a wider choice of exclusive travel experiences and partner networks for Miles & More status customers and further dedicated offerings for customers who only fly a few times each year. For example, the use of sustainable travel solutions will be rewarded with additional miles or other benefits. In addition, the introduction of a travel ID which recognises customers at every point of contact, no matter which airline they are flying on, will make it possible to match services and offerings with the personal needs of Lufthansa Group Airlines passengers.
Overall, these measures will enable the Lufthansa Group to offer its customers a unique product experience and thus significantly differentiate itself from the competition.
Lufthansa Group to focus increasingly on sustainability and social responsibility
Responsibility is the foundation of business activities in the Lufthansa Group. The Lufthansa Group aspires to lead the airline industry with high standards in this area too. It therefore builds continuously on its environmental commitment, is dedicated to many social issues and treats its employees and partners in the value chain responsibly and fairly.
In terms of environmental policy, the Lufthansa Group aims to cut its net carbon emissions in half by 2030 compared with 2019 and supports the objective of making aviation carbon neutral by 2050. Within the framework of these net goals, the Lufthansa Group sets itself specific efficiency targets for reducing carbon emissions in its core business segment that are line with the Paris Agreement and have been validated by the internationally recognised Science Based Targets initiative (SBTi) supported by the UN.
In order to achieve these objectives, the Lufthansa Group is investing continuously in fuel-efficient aircraft accompanied by operational efficiency measures at the airlines. The Lufthansa Group also works with policymakers and partners in industry, technology and research to promote the industrialisation and use of sustainable fuels. In addition, intermodal traffic is being systematically further expanded in all of its home markets.
The Lufthansa Group also includes sustainability aspects as a key factor in the design of its products and services. Through Compensaid and Squake, the Lufthansa Group offers passengers with the Group’s own airlines and also those travelling with other airlines the option of reducing CO2 emissions by purchasing sustainable fuels (SAF) or offsetting them through high-quality climate protection projects. Business trips made by Lufthansa Group’s employees are also offset. In its product and service development, the Lufthansa Group applies the principle of Reduce – Recycle – Reuse – Replace to avoid waste. Here the aim is to replace disposable plastic and aluminium products with environmentally friendly products wherever possible. The focus is increasingly on avoiding food waste.
In terms of responsibility for its employees, the Lufthansa Group attaches great importance to offering its staff an attractive working environment with transparent structures, efficient processes and a wide range of social benefits. The Lufthansa Group is thus seeking to further improve on its already good position as an employer within the aviation industry as a whole. At the same time, large German companies serve as a benchmark. For instance, the Lufthansa Group offers its employees an extensive range of opportunities for their professional and personal development, thus contributing to employee satisfaction and safeguarding jobs. Diversity and equal opportunity are a matter of course.
In terms of social responsibility, the Company promotes greater equality of opportunity for disadvantaged people worldwide via the financial and personell support for educational establishments and training provided by help alliance, the Group’s own aid organisation.
The central importance of sustainability for the Lufthansa Group is reflected in the fact that it is represented at the Executive Board level. Implementation of the sustainability strategy is further supported by its inclusion in the remuneration of the Executive Board members and the management levels and by the audited disclosures in the combined nonfinancial declaration. The Lufthansa Group also actively supports the measurement by relevant international ESG ratings, such as MSCI, Sustainalytics, CDP and ecovadis, to ensure transparency about activities and progress at all times. As well as the nonfinancial declaration which is required by law, the Lufthansa Group also reports according to TCFD and SASB standards, in order to meet its stakeholders’ various needs.
Dialogue with the Company’s stakeholders is also a component of sustainable corporate governance. This continuous exchange gives the Lufthansa Group an understanding of its different interest groups’ needs, expectations and wishes, which permits their inclusion in the Company’s business practices.
Multi-airline business model ensures the success of the Lufthansa Group
The airlines form the core of the Lufthansa Group. They are positioned in the relevant market segments as high-quality carriers. Their nationwide presence in their home markets enables them to offer an attractive range of flights and route networks. The Lufthansa Group aims to maintain the leading market position of its airlines going forward. To this end, the Lufthansa Group’s traffic system is continuing to be developed into a multi-traffic system, consisting of hubs, point-to-point traffic and intermodal offerings.
Lufthansa German Airlines and SWISS will continue to set standards for quality and cost-effectiveness in future. With their wide range of destinations and frequent flights, they offer the greatest connectivity of all the European airlines.
Austrian Airlines and Brussels Airlines connect their home markets with Europe and the world. At the same time, they combine a high-quality and attractive product which is attuned to the needs of their local markets with a low cost base which can hold its own against low-cost carriers at the bases in Vienna and Brussels.
With Eurowings, the Lufthansa Group has an innovative and competitive offering in point-to-point traffic, which addresses both price-sensitive and service-oriented customers with low-cost basic fares and additional service options that can be booked flexibly.
The continuous optimisation of the Group fleet has been accelerated as a result of the crisis. Key targets are the systematic renewal of the fleet to cut fuel consumption, reduce carbon emissions and trim the number of aircraft models by retiring and phasing out older, less efficient aircraft. Conversely, since 2022 additional state-of-the-art long- haul aircraft like the Airbus A350-900 and Boeing 787-9 technology have strengthened the Lufthansa Group fleet.
In order to exploit opportunities in the long-distance leisure travel market, the range of long-haul connections from the hubs in Frankfurt and Munich targeting private travellers is being expanded. Eurowings Discover supplements and strengthens the tourism portfolio of the Lufthansa Group with a range of short-, medium- and long-haul routes. Passengers are thus able to benefit from the wide feeder network and the established ground processes of Lufthansa Group Network Airlines. The global distribution strength of Lufthansa Group Airlines is also exploited.
Cooperation with partner airlines is becoming more important, in order to strengthen market presence in key traffic regions. The Lufthansa Group’s successful joint ventures are therefore being developed and partnerships expanded in all key markets. The range of intermodal transport solutions that are seamlessly integrated into the travel chain is also being extended. The Lufthansa Group is also seeking to play an active role in the consolidation of the airline industry, in line with its strategic and financial goals.
Aviation Services to be aligned with market needs
With its Aviation Services, the Lufthansa Group has several companies that are global leaders in their respective sectors. In order to secure and build on their successful positioning, Aviation Services are permanently adapting their business models to changing market conditions and competitive environments. Lufthansa Cargo is increasingly participating in international eCommerce shipments through the use of the pure freight version of the medium-haul aircraft A321. The Company is moreover modernising and expanding its cargo centre in Frankfurt, in order to participate in the growing airfreight market. To improve its range of products and services, Lufthansa Technik is making increased use of data-based, digital solutions, focusing its portfolio on higher-margin segments such as medical goods and utilising attractive growth potential.
Consistent alignment of the Group as an Airline Group
The value contributed to the Lufthansa Group by every one of the Aviation Services is reviewed and refined continuously. In connection with its positioning as an airline group, the Lufthansa Group not only assesses the attractiveness of the individual market segments, it also determines whether it is the best owner for the respective company on the basis of existing or potential synergies. It may therefore make sense for certain Aviation Services companies to further develop outside the Lufthansa Group or together with partners.
Following the sale of LSG group’s European business in 2020, the disposal of the LSG group’s remaining international business and AirPlus will be taken forward. The sale timing will depend on the recovery of the relevant markets that are key to achieving a fair valuation for the sale. Partial disposal and partnering options are currently being explored for Lufthansa Technik, taking into account the necessary capital expenditure, synergies and value creation potential.
In order to fully exploit potential synergies between the sub-areas and to minimise the need for coordination, the organisational structure and governance processes of the Lufthansa Group are being continuously developed and adjusted in line with current requirements. The aim of the development is to achieve lean, flexible and efficient structures as well as quicker decision-making processes. These changes are being accompanied by an expansion of agile and cross-functional work methods. This also aims to support cultural change and promote a flexible and enterprise-based mentality.