LHs strategy: discussion thread for customers, investors, consultants & armchair CEOs
Oct 21, 2014, 6:58 am
#1653
Join Date: Aug 2004
Location: OSL/IAH/ZRH (time, not preference)
Programs: UA1K, LH GM, AA EXP->GM
Posts: 38,265
Oct 21, 2014, 7:20 am
#1654
Join Date: Jan 2003
Location: NY NY USA
Posts: 192
IMHO - LH is not replicating BA's effort because of an innate "arrogance" in thinking that they are the best and they will lead the market, not follow it. Therefore LH clients are willing and eager to pay a premium for a non competitive product, including from/to ME3.
This reminds me how LH, in the far past ( early 90's) were having the same attitude in not wanting to discount the product - in any case. And here we are with the 99 euro nonstop you crowd. ( and the 123 euro "taxes" on awards!)
This reminds me how LH, in the far past ( early 90's) were having the same attitude in not wanting to discount the product - in any case. And here we are with the 99 euro nonstop you crowd. ( and the 123 euro "taxes" on awards!)
Oct 21, 2014, 9:20 am
#1655
Join Date: Dec 2007
Location: ORD
Programs: BA, AA, SQ, UA, AC, WS, MR TIT
Posts: 8,659
Oct 22, 2014, 1:54 am
#1656
Join Date: Dec 2007
Location: ORD
Programs: BA, AA, SQ, UA, AC, WS, MR TIT
Posts: 8,659
EK wants to slow their growth not because they don't have more customers to carry but because DXB infrastructure can't handle their massive growth
http://gulfnews.com/business/aviatio...ints-1.1401390
http://gulfnews.com/business/aviatio...ints-1.1401390
Oct 22, 2014, 2:28 am
#1657
Moderator: Lufthansa Miles & More, India based airlines, India, External Miles & Points Resources
Join Date: Dec 2002
Location: MUC
Programs: LH SEN
Posts: 48,187
LH Systems found a partner for their data center:
Lufthansa, IBM in talks over IT infrastructure unit sale • 4:15 AM
Yoel Minkoff, SA News Editor
Lufthansa (OTCQX
LAKY) is close to selling its IT infrastructure unit to IBM (NYSE:IBM), including an outsourcing agreement for the services, as part of a restructuring to better position itself to compete with low-cost carriers and Gulf rivals.
The move will reduce Lufthansa's annual IT costs by around €70M a year, but will result in a €240M ($305.2M) charge this year.
Under the planned deal, Lufthansa will outsource all of its IT infrastructure services to IBM under a seven-year agreement. A final price for the sale is still being negotiated.
Yoel Minkoff, SA News Editor
Lufthansa (OTCQX
LAKY) is close to selling its IT infrastructure unit to IBM (NYSE:IBM), including an outsourcing agreement for the services, as part of a restructuring to better position itself to compete with low-cost carriers and Gulf rivals.The move will reduce Lufthansa's annual IT costs by around €70M a year, but will result in a €240M ($305.2M) charge this year.
Under the planned deal, Lufthansa will outsource all of its IT infrastructure services to IBM under a seven-year agreement. A final price for the sale is still being negotiated.
Oct 22, 2014, 3:53 am
#1658
Join Date: Jul 2010
Location: BSL/FRA or PHL
Programs: LH Miles and More, DL SkyMiles, Bonvoy, Hilton
Posts: 2,335
Lufthansa, IBM in talks over IT infrastructure unit sale • 4:15 AM
Yoel Minkoff, SA News Editor
Lufthansa (OTCQXLAKY) is close to selling its IT infrastructure unit to IBM (NYSE:IBM), including an outsourcing agreement for the services, as part of a restructuring to better position itself to compete with low-cost carriers and Gulf rivals.
The move will reduce Lufthansa's annual IT costs by around €70M a year, but will result in a €240M ($305.2M) charge this year.
Under the planned deal, Lufthansa will outsource all of its IT infrastructure services to IBM under a seven-year agreement. A final price for the sale is still being negotiated.
Yoel Minkoff, SA News Editor
Lufthansa (OTCQXLAKY) is close to selling its IT infrastructure unit to IBM (NYSE:IBM), including an outsourcing agreement for the services, as part of a restructuring to better position itself to compete with low-cost carriers and Gulf rivals.
The move will reduce Lufthansa's annual IT costs by around €70M a year, but will result in a €240M ($305.2M) charge this year.
Under the planned deal, Lufthansa will outsource all of its IT infrastructure services to IBM under a seven-year agreement. A final price for the sale is still being negotiated.
It is a good thing that LH's cost of capital is so low... :roll eyes:
It is fascinating to me how many aspects of a business that were once considered strategic and important to keep in-house suddenly become ballast to be jettisoned at the first sign of trouble. I guess that is the difference between actually running a business and supervising it's dismemberment.
Oct 22, 2014, 4:06 am
#1659
Join Date: Sep 2004
Location: Southern Bavaria, Germany
Programs: LH Blue, BA Blue, Hyatt Gold
Posts: 1,517
Hmmm...a 3+ year payback period on outsourcing a key service--given the pace of change in the IT space, that looks a lot like a leap of faith--or desperation...I guess it depends a lot on the sales price/terms...
[...]
It is fascinating to me how many aspects of a business that were once considered strategic and important to keep in-house suddenly become ballast to be jettisoned at the first sign of trouble. I guess that is the difference between actually running a business and supervising it's dismemberment.
[...]
It is fascinating to me how many aspects of a business that were once considered strategic and important to keep in-house suddenly become ballast to be jettisoned at the first sign of trouble. I guess that is the difference between actually running a business and supervising it's dismemberment.
Or even worse: Hiring a consultant to sell this toolbox to the company. I *assume* that this is what is happening right now.
This decision seems to be following a blueprint of a consultancy-driven decision. With a lot's of follow-up revenue for restructuring consultancy etc..
Naturally on the side of the "consultant" and not the victim.
Oct 22, 2014, 5:06 am
#1660
Join Date: May 2009
Location: SIN (with a bit of ZRH sprinkled in)
Posts: 9,455
It's kind of fun to watch how LH destroys itself, step by step, when you don't have any investment or anything to lose about it (alright, SEN-hood for a few more years, but nothing in REAL investment..)
(alright, SEN-hood for a few more years, but nothing in REAL investment..)
Oct 22, 2014, 5:29 am
#1661
Moderator: Lufthansa Miles & More, India based airlines, India, External Miles & Points Resources
Join Date: Dec 2002
Location: MUC
Programs: LH SEN
Posts: 48,187
The internal line:
10/22/14
Lufthansa Group | Group
IT partnership with IBM to be signed shortly
Deutsche Lufthansa AG today announced that in the course of realigning the Group’s IT activities, it will be entering into a long-term IT partnership shortly. According to the terms to be agreed, Lufthansa will outsource all of the Group’s IT infrastructure services to IBM.
The IT partner is also expected to take over the Infrastructure division of the current Lufthansa Systems AG. The outsourcing agreement is to have a term of 7 years and will enable Lufthansa to benefit from a permanent reduction of IT infrastructure costs by average approximately 70 million EUR annually. Additionally, it provides access to the latest IT technologies. An offer to this effect has been submitted and is now subject to final negotiations.
“The Cooperation with a global and successful IT group like IBM will strengthen the competitiveness of the Group companies and the Lufthansa Group as a whole. It will directly improve our cost base and allows access to the latest IT technologies which we will use to continue digitizing our business processes in order to increase efficiency and customer focus” said Simone Menne, Member of the Executive Board and CFO at Deutsche Lufthansa AG and Chairperson of the Supervisory Board of Lufthansa Systems AG. “This will also give the employees of the Infrastructure division clear job prospects and enable them to participate in future technological developments,” Menne continued.
The plan is to split Lufthansa Systems into three companies and to sell the Infrastructure division as part of the outsourcing process. The Airline Solutions and Industry Solutions divisions shall remain in the Group and are to operate as independent companies in their respective markets in the future. The agreements are subject to the approval of the Lufthansa Supervisory Board and the antitrust authorities. Execution will also require the timely and successful conclusion of the social compensation plan and the reconciliation of interests.
Lufthansa Group | Group
IT partnership with IBM to be signed shortly
Deutsche Lufthansa AG today announced that in the course of realigning the Group’s IT activities, it will be entering into a long-term IT partnership shortly. According to the terms to be agreed, Lufthansa will outsource all of the Group’s IT infrastructure services to IBM.
The IT partner is also expected to take over the Infrastructure division of the current Lufthansa Systems AG. The outsourcing agreement is to have a term of 7 years and will enable Lufthansa to benefit from a permanent reduction of IT infrastructure costs by average approximately 70 million EUR annually. Additionally, it provides access to the latest IT technologies. An offer to this effect has been submitted and is now subject to final negotiations.
“The Cooperation with a global and successful IT group like IBM will strengthen the competitiveness of the Group companies and the Lufthansa Group as a whole. It will directly improve our cost base and allows access to the latest IT technologies which we will use to continue digitizing our business processes in order to increase efficiency and customer focus” said Simone Menne, Member of the Executive Board and CFO at Deutsche Lufthansa AG and Chairperson of the Supervisory Board of Lufthansa Systems AG. “This will also give the employees of the Infrastructure division clear job prospects and enable them to participate in future technological developments,” Menne continued.
The plan is to split Lufthansa Systems into three companies and to sell the Infrastructure division as part of the outsourcing process. The Airline Solutions and Industry Solutions divisions shall remain in the Group and are to operate as independent companies in their respective markets in the future. The agreements are subject to the approval of the Lufthansa Supervisory Board and the antitrust authorities. Execution will also require the timely and successful conclusion of the social compensation plan and the reconciliation of interests.
Oct 22, 2014, 6:06 am
#1662
Join Date: Sep 2004
Location: Southern Bavaria, Germany
Programs: LH Blue, BA Blue, Hyatt Gold
Posts: 1,517
Thanks for the comprehensive update, Oliver 2002!
Just would like to point out the absurdity:
So simply nothing else than cloaked mass redundancies.
The forming of a new coporate entity additionally allows to save huge amounts of severance pays.
That said the well-known and tried and tested rule in Germany where 1 year of service equals 1 month salary sverence pay plus a negotiable amount is shredded.
As even many "consultancies" have to reconfirm this will have a significant impact on the motivation of the remaining personnel.
Just would like to point out the absurdity:
“This will also give the employees of the Infrastructure division clear job prospects and enable them to participate in future technological developments,” Menne continued.
[...]
Execution will also require the timely and successful conclusion of the social compensation plan and the reconciliation of interests.
[...]
Execution will also require the timely and successful conclusion of the social compensation plan and the reconciliation of interests.
The forming of a new coporate entity additionally allows to save huge amounts of severance pays.
That said the well-known and tried and tested rule in Germany where 1 year of service equals 1 month salary sverence pay plus a negotiable amount is shredded.
As even many "consultancies" have to reconfirm this will have a significant impact on the motivation of the remaining personnel.
Oct 22, 2014, 6:11 am
#1663
Join Date: Nov 2008
Programs: Disgruntled HON**, Indifferent EK Gold, skeptical BA Silver
Posts: 1,734
They are really late to the the IT outsourcing game... So late, that not only the first wave of companies but also the second wave of companies who outsourced IT to the likes of IBM are insourcing again.
Oct 22, 2014, 6:38 am
#1664
Join Date: May 2009
Location: SIN (with a bit of ZRH sprinkled in)
Posts: 9,455
Oct 22, 2014, 7:45 am
#1665
FlyerTalk Evangelist
Join Date: Jun 2005
Location: Point Place, Wisconsin
Programs: LH HON, BA Gold, EK Gold
Posts: 14,505
Thanks for the comprehensive update, Oliver 2002!
Just would like to point out the absurdity:
So simply nothing else than cloaked mass redundancies.
The forming of a new coporate entity additionally allows to save huge amounts of severance pays.
That said the well-known and tried and tested rule in Germany where 1 year of service equals 1 month salary sverence pay plus a negotiable amount is shredded.
As even many "consultancies" have to reconfirm this will have a significant impact on the motivation of the remaining personnel.
Just would like to point out the absurdity:
So simply nothing else than cloaked mass redundancies.
The forming of a new coporate entity additionally allows to save huge amounts of severance pays.
That said the well-known and tried and tested rule in Germany where 1 year of service equals 1 month salary sverence pay plus a negotiable amount is shredded.
As even many "consultancies" have to reconfirm this will have a significant impact on the motivation of the remaining personnel.