N1003U

1bn for hard product improvements, and 0,5bn for "innovation"...hmm..how much is that in terms of % of revenue over 5 years (investment seems to be aimed at a timeline between now and 2020)? It is perhaps good to not spend so much on "innovation" when you don't have much in the way of innovative ideas, but for a group the size of LH, this does not strike me as a huge amount of money dedicated to keeping the product competitive...


How many of those aircraft are from LH mainline, and how many from other group airlines...?
If mostly from LH mainline, that paints for me a whole different picture of the plan...

YuropFlyer

Imho it will be 100% mainline, maybe a few old A340's from LX thrown into the mix.

Other than that: The few long haul planes that OS has will most probably stay (recently refurb, no plans to change 767/777)

LX is supposed to grow, ie getting the 777s and give away only some A340's, in total increasing capacity

SN imho also is supposed to grow, at least not to give away airplanes..

So, that leaves the old A340s (mostly 600s, but I guess also some of the 300's), maybe some 747-400's, and probably A330's once LH buys their Neo-version.

So, it will be a mix of horrible-fuel-non-efficent A340's/B747-400's, and maybe at a later date some slightly-more-efficent A330's thrown in the mix.

Now, this might work with a barrel at $30..

Someone should inform LH management about current oil prices

oliver2002

Nope, XQ longhaul was supposed to get 10-15 A330/B763 externally, this was mentioned by Spohr to the press. The CFO mentioned 10-15 new external orders/lease of A320 for EW in the analyst call.

weero

Too bad LH's management just changed. With the devolution to have only LCCs feeding the megahub, LH's core business could be proudly renamed LuftFRAnsa. Keeping the logo almost intact, the airport, and the name of the visionary who introduced the concept.

3 in one name ...

YuropFlyer

So what's the earmarked comment then?

Somehow it just doesn't make sense what LH is doing in the last few years - and it seems the numbers do show it as well now, with IAG (which is probably the best comparison to LH Group) doing much better.

To Fly, to Serve, Nonstop you

NewbieRunner

Most of 100 cannot be from LH mainline since the total figure of 600 seems to consist of (according to airfleets.net, including freighters):

Lufthansa 300
SWISS 65
Austrian 75
Lufthansa Cityline 59
Germanwings 50
Brussels 46
Swiss European 20

GBM.flights

And these (which probably only offset the freighters):
Eurowings 23
Air Dolomiti 10
Edelweiss 7

I was about to search for Augsburg Airways but then remembered it's no more (and BRN flights that were quite handy)

GBM.flights

LH results for July
http://investor-relations.lufthansagroup.com/fileadmin/downloads/en/financial-reports/traffic-figures/Lufthansa/2014/LH-Investor-Info-2014-07-e_4BqTknSa.pdf

Main sentence (for me):
The pricing environment was again clearly negative on last year, but stabilized in the course of the month.

YuropFlyer

Terribly bad weather in LH's home market in July certainly helped to push last-minute bookings.

(probably going to be the same for August)

gum

Thanks for the link!

I am very astonished how fast the trans-atlantic traffic to the US has recovered. The increase in seat-miles was clearly absorbed and additionally a seat-load-factor of 87,5 % was reached.

So despite the rigourous border controls at the US it seems that this is a valuable holiday destination again.

On the other hand it sheds a light on the planned "WINGS" longhaul low-cost offer. If the traditional airline realizes a slf beyond the 80s where is the air for improvement in case of the new LCC offer?

I am convinced that this LCC offer will not be profitable due to the fact that there the mix between premium traffic and low fares can't be reached.

TRAVELSIG

"low risk fast approach "

http://www.ch-aviation.com/portal/ne...aul-subsidiary

SuperFlyBoy

Jet Airways (India) tried this dual LCC + full-fare approach - which effectively failed.

Now they are merging the LCC into their full-service airline to compete with the SIA + Tata new full-service airline.

However, the regions covered are completely different, as well as the markets they operate in - so tough to say how LH's LCC will fare...

I seriously thought that LH should have not cut corners and concentrated on a better product - because now they effectively have overbooked Y cabins on the routes I used to fly...

gum

This is more than an agree. :-)

The main problem is that the board of directors thinks that the inflow of revenue is unchanged if the value proposition of the product deteriorates.

Or clearly spoken: The high-density layout of 205/200 seats in an A321 only delivers additional value if:

1. The number of C pax remains the same - which is questionable
2. Passengers accept the decrease in size of galley as well the opportunity for catering
3. The additional 16 seats (from the 184 layout) can be sold without damaging the RASK in Y
4. People accept the loss of one lavatory even on m/h routes like to TLV/Cairo etc.
5. Not a single passenger per flight of the higher booking classes is leaving LH

That said this won't work if you don't have a captive customer base.

And I am just talking about reintroduction of former product features not something like a real Business Class which can be found here:

http://www.dragonair.com/ka/en_HK/tr...ess-class.html

Greg45

Or here on a direct competitor. And no, I will not post pictures of TK's economy or business meals - would really be unfair to poor LH.

IAN-UK

In LH eyes the Y-class product is completely commoditised. Why offer miles and comfort when bulk traffic is driven by price? A passenger queueing thirty minutes for the lavatory might well be put off flying Lufthansa again, but who cares? There's an infinite horde of potential flyers waiting to grab cheap tickets. It's a lighter version the original Ryanair philosophy.

Premium economy will be the neat(ish) solution for those who would otherwise face the criminally expensive booking classes at the top end of Y. Of course, the downside will be diversion to premium economy of cheapskate bums from C-class seats. Indeed, as you say, the big gamble is maintaining demand for the business-class seats at current fare levels in the face of a weakening product.