Deutsche Lufthansa AG is pushing ahead with cost-cutting efforts to meet the challenge of an airline industry buffeted by “unprecedented” shifts in demand following terrorism in some of Europe’s most popular travel destinations.
“Market volatility has become huge” amid economic uncertainty, particularly over the possible effects of Britain’s vote to leave the European Union, as well as terrorist incidents, Chief Executive Officer Carsten Spohr told reporters late Thursday in Frankfurt. “I haven’t seen anything like this in my career.” The German carrier is transforming itself at “the highest possible speed” to maintain earnings, he said.
Lufthansa is among European airlines that have scaled back flight plans and earnings forecasts following deadly terrorist attacks in cities including Paris, Brussels and Istanbul in the past year and a half. The German company, which cut its forecast in July to predict a drop in operating profit from last year’s record, has been focusing on building up its Eurowings low-cost brand to fend off expansion by discount carriers. Lufthansa network airlines will grow more slowly than the industry’s 5 percent increase this year, Spohr said.
The carrier is also struggling to conclude a contract with pilots after reaching a deal with flight attendants that it said will contribute to profit this year through reduced spending and lower pension contributions. Spohr said at the briefing that he’s “optimistic we can resume talks soon” with the pilots union.
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