Lufthansa CEO defends low-cost expansion plans

Monday, 14 July 2014 01:02 - - {{hitsCtrl.values.hits}}

Reuters: Lufthansa’s new chief executive has defended the airline’s plans to expand its low-cost services under new brands, after some analysts questioned the wisdom of such a move. Carsten Spohr, who took over as CEO in May, presented plans last week that include expanding low-cost services in Europe and possibly on intercontinental flights, as well as grounding eight planes this winter, to battle competition from Middle Eastern and low-cost carriers. Spohr said Lufthansa, Europe’s largest airline by revenue, needed to do more to lure price-sensitive travelers but would risk losing higher-paying business customers if it did so under its premium namesake brand. “If you’re on a Lufthansa product, you expect certain elements. If I take them away I hurt my brand,” he told a gathering of analysts in London. Using a carrier such as Eurowings or even starting from scratch, as Lufthansa would have to for low-cost long haul, also allows Lufthansa to avoid collective labor agreements at its Lufthansa and Germanwings units, he said. Eurowings operates at a cost base about 20% below that of Germanwings.

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