Lufthansa Airlines
Executive Overview:
Lufthansa is the largest airline in Europe in terms of passengers carried. By 2002, Lufthansa had become of the strongest airlines and top aviations groups in the world. Lufthansa had undergone a decade of fundamental change. Lufthansa was transformed from a state-owned, unprofitable national airline into one of the most profitable, privately owned aviation groups in the industry. The group turned a record loss of €350 million in 1992 into a pre-tax profit of €952 million in 2002. This financial result reflected Lufthansa’s major competitive advantage-its ability to respond rapidly, act flexibly, and withstand crises. Lufthansa proved its unique change management competence when it coped with September 11th, the most serious crisis in the airline industry since World War II. The aviation group pulled ahead of its competitors and reversed a loss of €744 million in 2001 into an operating profit of €718 million in 2002. In 2003, the war in Iraq and the SARS disease demanded that, more than ever before, Lufthansa draw on its ability to cope with crises. Overcoming change-tiredness and continuous re-energizing were seen as the key management challenges in 2003.
Strategic Issues:
How to maintain sustainable success and secure its future as the leader in the airline industry while: 1) Restructuring the organization to increase cost and revenue transparency and to reduce fragmentation in decision processes.
2) Focusing on continuing strategic cost savings in terms of creating Asian alliances. 3) Combating exhaustion, change-tiredness, or even organizational burnout in an industry that requires maintaining constant change momentum.
Potential Business Impact:
From autumn 2003, Lufthansa planned to offer its passengers new business class accommodations; it intended to invest around €30million in a program that was to be implemented. The new CEO also calls for a high level of company innovation which will cost additional resources.
Lufthansa is the largest airline in Europe in terms of passengers carried. By 2002, Lufthansa had become of the strongest airlines and top aviations groups in the world. Lufthansa had undergone a decade of fundamental change. Lufthansa was transformed from a state-owned, unprofitable national airline into one of the most profitable, privately owned aviation groups in the industry. The group turned a record loss of €350 million in 1992 into a pre-tax profit of €952 million in 2002. This financial result reflected Lufthansa’s major competitive advantage-its ability to respond rapidly, act flexibly, and withstand crises. Lufthansa proved its unique change management competence when it coped with September 11th, the most serious crisis in the airline industry since World War II. The aviation group pulled ahead of its competitors and reversed a loss of €744 million in 2001 into an operating profit of €718 million in 2002. In 2003, the war in Iraq and the SARS disease demanded that, more than ever before, Lufthansa draw on its ability to cope with crises. Overcoming change-tiredness and continuous re-energizing were seen as the key management challenges in 2003.
Strategic Issues:
How to maintain sustainable success and secure its future as the leader in the airline industry while: 1) Restructuring the organization to increase cost and revenue transparency and to reduce fragmentation in decision processes.
2) Focusing on continuing strategic cost savings in terms of creating Asian alliances. 3) Combating exhaustion, change-tiredness, or even organizational burnout in an industry that requires maintaining constant change momentum.
Potential Business Impact:
From autumn 2003, Lufthansa planned to offer its passengers new business class accommodations; it intended to invest around €30million in a program that was to be implemented. The new CEO also calls for a high level of company innovation which will cost additional resources.