Lufthansa last year beat Air France-KLM in passenger traffic. The German carrier partly achieved this after making the strategically brilliant move of assuming parts of troubled Air Berlin. But both European giants must constantly watch out for rising unit costs and falling unit revenues.
Deutsche Lufthansa AG has overtaken Air France-KLM Group to become Europe’s biggest airline, grabbing the top spot held by the Paris-based company since a merger of the French and Dutch flag-carriers in 2004.
Having closed in on its rival in 2017, the German carrier finally cruised past last year after boosting passenger traffic 9 percent, almost three times the pace of growth at its rival. Air France-KLM is also being reeled in by British Airways owner IAG SA, which expanded twice as fast in 2018.
The changing hierarchy marks the culmination of mostly organic growth at Lufthansa, aided by the purchase of smaller brands Swiss, Austrian and Brussels and the expansion of discount unit Eurowings, which grew by almost one-quarter last year. Lufthansa also secured a key deal with pilots in 2017 and last year benefited from unexpectedly high demand in first class.
Air France-KLM, by contrast, has suffered years of strife as workers resist overhaul plans, leading to successive management shakeups as its French state shareholder balked at sometimes violent labor unrest. The French arm was also affected by air-traffic control strikes last year, as well as the nationwide Yellow Vests anti-government protests.
Lufthansa is now 0.2 percent bigger than Air France-KLM when measured by traffic or revenue passenger kilometers, the industry benchmark calculated by multiplying the number of passengers carried with the distance flown.
IAG was founded through a merger of BA and Spain’s Iberia, a carrier significantly smaller than KLM, and has also absorbed discount specialist Vueling and Aer Lingus of Ireland.
©2019 Bloomberg L.P.
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Photo Credit: Shown here is a logo presentation party at Lufthansa's A380 hangar at Frankfurt Airport, featuring a Boeing 747-800. Lufthansa has overtaken Air France-KLM to become Europe's biggest airline group. Germany has triumphed over the French and Dutch flag-carriers. Alex Kraus / Bloomberg
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