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Lufthansa is preparing to announce several thousand job cuts on Monday as part of a restructuring program aimed at reducing costs and restoring profitability. According to sources close to the matter, the airline plans to reduce its administrative staff by around 20%. Lufthansa employs about 15,000 office workers, meaning several thousand positions could be eliminated.
The decision follows two profit warnings in 2024 and a significant decline in earnings. The company’s profits fell nearly 20% last year due to aircraft delivery delays and repeated walkouts. Chief Executive Carsten Spohr informed employees about the planned cuts on Friday, telling staff that the airline must become leaner to invest and compete effectively.
Shares in Lufthansa rose 3.4% on Friday to their highest level in over three weeks, following reports of the planned cuts. Investors have long pressed the company to take stronger measures to reduce costs and improve efficiency.
Investors and analysts have consistently criticized Lufthansa for its failure to reduce expenses and expand its core activities. The airline has been unable to reassure markets of its turnaround strategy and has missed its target of achieving an 8% operating margin by 2025.
Research from Bernstein noted that despite operating fewer planes and flying less than in 2019, the airline group employs 7% more staff. Analysts said this imbalance has increased costs and reduced competitiveness. The upcoming Capital Markets Day will be the first in six years, and management is expected to present its “Matrix Next Level” restructuring program.
The plan will enable Lufthansa to consolidate its core operations, including sales, network planning, and loyalty programs, in Frankfurt. By 2026, this will reduce the decision-making independence of subsidiaries like Austrian Airlines, Swiss, and Brussels Airlines.
The planned job cuts have already sparked resistance from unions. Verdi, which represents some Lufthansa staff, said it will use upcoming collective bargaining rounds to challenge any drastic workforce reductions. Union representatives argue that the cuts cannot be accepted in their current form.
Labour disputes remain a serious challenge for Lufthansa. Pilots remain locked in a dispute over pensions, raising the possibility of further strike action. Aviation experts noted that while centralising management functions may support efficiency, implementing the reductions in a socially acceptable way will be difficult.
Lufthansa continues to lose ground to European rivals Air France-KLM and International Airlines Group, both of which outperformed the German carrier in profitability. The gap in margins has created additional pressure on Lufthansa to accelerate restructuring and reduce costs.
The new business operations, such as those with Discover and City Airlines, that the firm hopes to undertake, will provide more flexibility in staffing and decrease total costs. Nevertheless, convincing investors and analysts of actual progress would still be a major challenge.
The airline is expected to outline its strategy and provide an outlook to shareholders at its presentation on Monday.
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