Group Strategy

The market and competitive environment move at a very quick pace in the aviation sector. Exogenous sources of uncertainty, resource bottlenecks, shifts in the value chain and evolving customer requirements necessitate permanent change, but also offer opportunities. For instance, this includes ongoing delays in the delivery of new aircraft and the related capacity bottlenecks, increased demand for sustainable products and personalised travel experiences as well as innovative technologies.

The Group’s strategy envisages structural transformation and modernisation of the Lufthansa Group so as to be optimally positioned in a changing, fast-paced geopolitical environment with significant impacts on demand as well as supply and value chains. The goal is to consistently act upon opportunities arising from trends and market changes. Services, business models and organisational structures are to be con­ tinuously aligned with the complex and dynamic market environment. The aim is to safeguard the Lufthansa Group’s leading market position and economic success by making it a more agile, flexible and competitive organisation. In particular, a further increase in its customer orientation, accelerating innovation and digitalisation, corporate responsibility and sustainability, modern forms of work organisation and valuebased management will ensure that the Lufthansa Group is ready for the future. The development of the Lufthansa Group’s corporate culture is driven by a Group-wide initiative in order to promote cooperation between all of its Group companies and business segments.

The Lufthansa Group is continuing to pursue the transformation begun in recent years. For example, this includes the widening of its route network through its equity investment in ITA Airways as well as the further expansion of the range of flights offered by Lufthansa City Airlines for competitive feeder services at its Frankfurt and Munich hubs. In addition, it is consistently realising economies of scale and scaling up flight operations with competitive structures and operational performance.

Within this long-term strategic framework, the Lufthansa Group defines tactical areas of focus in line with specific internal and external requirements.

In particular, structurally increasing profitability through higher income and cost-cutting is a high priority. For instance, Lufthansa Airlines has launched a turnaround programme with the goal of increasing efficiency, reducing complexity and im­ proving quality. This plan includes shifting more short-haul traffic to more efficient flight operations that are better aligned with the respective market segment. The productivity of aircraft and crews will be enhanced by reducing the number of aircraft types in the long-haul fleet, for example, along with permanent optimisation of operational processes and the route network. Another aim is to reduce the fixed cost base and to make the cost structure as variable as possible in order to minimise the impact of seasonal and cyclical fluctuations in demand.

In view of changes to demand structures, an even greater focus on the customer is a core element of the Group strategy. The Lufthansa Group aims to offer travel products with the highest quality standards as well as consistent solutions along the entire travel chain. This is achieved by means of new services on the ground as well as new products offered on board and via digital channels. At the same time, customer service is being expanded with innovative digital features and personal dialogue. Customer communication activities are to be adjusted in line with the Lufthansa Group’s various customer segments and tailored to their individual requirements. Safe and reliable flight operations are a core focus at all times.

Passengers receive a holistic service which features product elements such as comfortable seating and lounges, attentive staff and innovative digital services, including the use of chatbots, the option to pre-order in-flight meals as well as automated processes to satisfy customer requirements in the case of flight irregularities. The Lufthansa Group strives to consistently achieve its premium positioning, to expand its product range in line with industry trends and customer feedback, and to continue refining its loyalty programme. Of key importance is the fulfilment of its promise as a premium provider at every point of contact throughout the travel chain, while at the same time simplifying the travel experience. The focus here is, in particular, on all aspects which are highly relevant for customers, which influence repeat purchase decisions and a willingness to pay, and which thus generate value for the Lufthansa Group and its customers.

The Lufthansa Group is continuing expanding its product and service range. Specifically, this means providing a wider choice of individually selectable product components and thus a travel experience that caters to passengers’ individual requirements, on board and on the ground, and in the premium segment in particular. For instance, through their refit with the Lufthansa Allegris and SWISS Senses product generation seating, Lufthansa Airlines and SWISS offer a new travel experience in every class on long-haul routes. Austrian Airlines is also getting a new cabin layout for long-haul flights with the introduction of the Boeing 787 Dreamliner, which is designed to expand the airline’s offering with high-quality service details. New digital customer services on the ground, such as information on walking times at airports and, at selected locations, new check-in areas for First Class and HON-Circle customers, are strengthening the hospitality profile of Lufthansa Group Passenger Airlines.

Progress is also being made on the automation of customer services. The digital customer portal enables customers to access all relevant information relating to their journey and resolve issues such as rebookings or refunds, or purchase additional products quickly and intuitively thanks to new, interactive self-service options. There will also be a new approach to customer loyalty and personal interaction. 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. In addition, the continuous expansion of the Lufthansa Group 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.

These measures aim to improve customer satisfaction together with the operational areas and other interfaces. The Net Promoter Score (NPS) is an indicator of customer satisfaction and measures the willingness of customers to recommend the services of Lufthansa Group Airlines.

The airlines form the core of the Lufthansa Group. They are positioned as high-quality carriers in the relevant market ­segments. 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.

With their wide range of destinations and frequent flights, Lufthansa Airlines and SWISS offer the greatest connectivity of all of the European airlines.

Austrian Airlines and Brussels Airlines combine a high-quality and attractive product which is primarily attuned to the needs of their local markets with a low cost base which can hold its own against low-cost carriers at their 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.

Work is being continued on the systematic renewal of the Group fleet. Key targets are to cut fuel consumption, to reduce carbon emissions and costs for maintenance and operational irregularities, and to trim the number of aircraft models by retiring and phasing out older, less efficient models. Since 2022, additional state-of-the-art long-haul aircraft such as the Airbus A350 and Boeing 787 have strengthened the Lufthansa Group’s fleet.

In order to consistently exploit opportunities in the leisure travel market, the range of short-, medium- and long-haul routes from the hubs in Frankfurt and Munich targeting leisure travellers is being expanded. Discover Airlines supplements and strengthens the tourism portfolio of the Lufthansa Group. 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 being exploited.

Cooperation with partner airlines is becoming more important in order to strengthen market presence in key traffic regions and offer customers attractive connecting flights. The Lufthansa Group’s successful joint ventures are therefore being developed and partnerships expanded in key markets. The range of intermodal transport solutions that are seamless­ ly integrated into the travel chain is likewise being extended.

The Lufthansa Group is also seeking to play an active role in the consolidation of the airline industry with a focus on safeguarding its existing market position and opening up new growth potential. Particular attention is paid to further regional diversification of the business model such as with the equity investment in ITA Airways. Potential additional equity investments in other companies are judged on the basis of their contribution to value creation.

Responsibility is the foundation of business activities in the Lufthansa Group. The Lufthansa Group aspires to lead the aviation sector with high standards in this area as well. It is therefore continuously expanding its environmental commitment, is dedicated to 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. By 2030, it aims to cut its carbon emissions per revenue tonne-kilometre by 30.6% in comparison with 2019. This target was validated by the SBTi in 2022. The Lufthansa Group thus became the first airline group in Europe and the second worldwide with a scientifically verified CO₂ reduction target in line with the goals of the Paris Climate Agreement of 2015.

In order to achieve these objectives, the Lufthansa Group is investing continuously in fuel-efficient aircraft alongside measures to boost its operational efficiency. The Lufthansa Group is also working with policymakers and partners in industry, technology and research to promote the increased use of sustainable aviation fuel (SAF). In addition, intermodal traffic is being systematically further expanded in all of its home markets.

Moreover, the Lufthansa Group includes sustainability aspects in the design of its products and services. It offers its customers tailored services enabling them to reduce the carbon emissions caused by their flight by purchasing SAF or to offset them through high-quality climate protection projects. The Group’s Green Fares, which are already included in the SAF product bundle and include offsetting, are a particularly innovative service. Since 2019, the Lufthansa Group has also offset business trips made by its employees. In its product and service development, the Lufthansa Group follows the “R strategies” for its use of materials: “reduce – reuse – recycle – recover – replace”. These strategies serve as a holistic guiding principle for the Lufthansa Group’s activities in relation to resource conservation and the circular economy. The aim here is to replace disposable products with environmentally friendly alternatives wherever possible. The focus is also 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 its strong position as an employer within the aviation industry. At the same time, large German companies also serve as a benchmark. The Lufthansa Group offers its employees extensive opportunities for their ongoing development, thus contributing to employee satisfaction and safeguarding jobs. Diversity and equal opportunity are seen as a strength. In terms of social responsibility, the Company supports disadvantaged people worldwide with financial and personnel support for educational establishments and training provided by help alliance, the Group’s own aid organisation.

Given the central importance of sustainability, this topic is re presented at the Executive Board level. Moreover, implementation of the Group’s sustainability strategy is accounted for in the remuneration of the Executive Board members and the management levels. The Lufthansa Group also actively supports its assessment by relevant international ESG ratings, such as MSCI, Sustainalytics, CDP and ecovadis, to ensure transparency regarding its activities and progress at all times.

With its Logistics and MRO business segments, the Lufthansa Group has additional companies that are global leaders in their respective sectors. In order to secure and build on their successful positioning, these companies are permanently adapting their business models to changing market and competitive conditions. Lufthansa Technik is moving forward with the digitalisation and modularisation of its products in a targeted manner and continuing to expand its product portfolio in related business segments such as Defence and CleanTech Solutions (including AeroSHARK). Lufthansa Cargo is continuously adjusting its product portfolio in line with increasingly specialised demand and responding to the changing nature of globalisation with a broader geographical focus. This includes its entry into the transpacific market. The Company is moreover modernising and expanding its cargo centre in Frankfurt, in order to participate more strongly in the growth of the ­ airfreight market.

All Lufthansa Group companies are continuously reviewed with regard to the value they contribute within the Group. As well as assessing the attractiveness of individual market segments, the Lufthansa Group also analyses whether it is still the best owner for the respective company on the basis of existing or expected synergies. It may therefore make sense for certain companies to continue their development outside of the Lufthansa Group or together with partners.

In order to fully exploit potential synergies and 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 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 expansion is also intended to support cultural change and promote a flexible and enterprise-based mentality.