Group | 8/1/14
Carsten Spohr: "We want to create long-term prospects for everyone."

Mr Spohr, looking back at the events of the past two weeks, is flying not as safe as we previously thought?

Flying is and remains the safest way to travel, and travelling with us is and remains the safest way to fly. Nevertheless, airlines, the International Air Transport Association (IATA) and the International Civil Aviation Organisation (ICAO) are together looking at the lessons our industry has to learn from the two terrible accidents involving Malaysia Airlines.



You have been CEO for 100 days now. What has been more dominant: stress or pleasure?

Pleasure, of course, otherwise it wouldn’t be possible to do my job. Leading a large corporate group such as Deutsche Lufthansa, which is an icon here in Germany, is something which, of course, carries a great deal of responsibility every day.

New plan, full power – the seven new strategic areas of action (external) serve to achieve the target of being the first choice for customers, employees, shareholders and partners, thereby remaining the industry leader in the long term. Key factors here are the age of our fleet, our market positions and our financial stability.



You recently presented seven new strategic areas of action (see chart). Is that not a bit much in one go?

Not if we want to safeguard and build on our position as the number one choice for customers, employees, shareholders and partners. The fact that we announced 7 new areas of action to achieve the number 1 target of being the industry leader on 9 July – one day after the magnificent 7:1 win over Brazil – can only be a good sign (laughs).



Sounds like a balancing act: bringing together the interests of customers, employees and shareholders. It’s likely that one group will always feel disadvantaged.

Perhaps, but only for a short time. It is my duty and my understanding of sustainable corporate governance to balance these interests – with long-term prospects for everyone.

Is there a silver bullet?

We are a service company, which means that only satisfied customers will ensure that our aircraft are full and that our service companies, such as Lufthansa Technik and LSG Sky Chefs, can grow. Satisfied customers boost our profitability – this means that not only are we able to create prospects for the Company and its employees, but we also enable shareholders to participate in the Company’s success.



The customer above all else?

Yes, but nothing works without motivated employees. That is why we want to continue being the most attractive employer in the industry, working better than our competitors in the recruitment, training, development and management of our employees. And without shareholders, who invest their capital in our Group, we will not be able to finance our future to the extent required to remain the number one in our industry over the long term.

And now you are dealing with one strategic area of action after another.

Unfortunately, we cannot afford ourselves this luxury. This week, we decided that each of these areas shall be assigned a sponsor on the Executive Board. It was also decided who will implement the areas of action at an operational level. We have to work at full speed in all areas because our industry is changing rapidly. Our customers will benefit the most from this: the primary focus of capital expenditure in the Group over the next few years will be on our core brand, Lufthansa. Of the 261 aircraft on order, which we are due to receive over the coming years and which will cost EUR 32bn at list price, around 200 are currently earmarked for Lufthansa Passenger Airlines. We are also investing more than EUR 1bn in products and services such as the new First and Business Class, and Premium Economy. And we are powering ahead when it comes to innovation. EUR 500m will be invested here by 2020, including in the “Innovation Hub” in Berlin. The mission: to come up with new, innovative products for our customers.



Good – but our Group is more than “just” Lufthansa Passenger Airlines.

Let me put it this way: Lufthansa Passenger Airlines may not be the be-all and end-all for our Group – but without it, all is nothing. But you are right, of course. Everyone contributes to the success of our Company. Our Group airlines complement our home market. And, by way of example, we are planning to significantly boost the service companies. We are well positioned to do this as well as to participate in the growth of our competitors: every third aircraft that is produced around the world today is “catered” by us; every tenth maintained by us.



But there are plans to introduce low-cost platforms such as “Wings” on both short and long-haul routes. It seems that cheap is cheerful.

The figures paint a different picture. Of our more than 600 aircraft, only 100 are earmarked for the “Wings” second brand family. More than 500 will remain based at our hubs. A lower-cost secondary brand stops our premium brands, Lufthansa and Swiss, from having to overstretch themselves and dilute their product offerings. Incidentally, according to recent reports, Air France and British Airways also intend to copy our concept almost like for like – it seems that we are not far off the mark with our plans.

Nevertheless, this could cause stomach pains among cockpit staff at Lufthansa Passenger Airlines.

It doesn’t have to. The Lufthansa Group now has flight operations going into double figures, for which we on the Executive Board carry responsibility. Only if we win back market share together as a Group will we able to safeguard jobs – including at the core of our Company and thereby for the pilots who are included in the Group wage agreement (aka “Konzerntarifvertrag”). This accounts for around 50 per cent of the pilots in the Group at present. One example: Air traffic to and from Asia is growing, but largely without us. Just ten years ago, one in three passengers from Germany flew there with Lufthansa. Today it is one in eight!



Recently, the Vereinigung Cockpit pilots’ union called on the Executive Board to confirm that it will stick to the wage agreements.

Of course we will honour the wage agreements – for pilots and for every other occupational group at Lufthansa. This is what has characterised our Company in the past, and this will continue to be the case in the future. So I cannot understand these concerns – of course we will continue to act in accordance with the law in the future.



Change of subject: Is Score now a thing of the past with the seven new areas of action?

Not a chance. Improving efficiency year on year is an ongoing issue and will continue to be so. We, in the airline industry, have to accept this just as much as the automotive industry has to. That is why we will have to take renewed action every year to improve our efficiency.

Many people will ask: is that really necessary?

Yes, it is. Products and services that we buy have become more and more expensive thanks to inflation. On top of this, our average yields are in decline. If we want to counter these two factors, we have to find and implement around EUR 700m worth of efficiency improvements every year. Our annual target is to achieve an operating result that enables us to invest as much as EUR 3bn in new aircraft every year.



One thing remains certain: life is not a picnic, certainly not in our industry.

(Laughs) That’s right. Nevertheless, it motivates me to continue working not just in this fascinating industry, which I have done so for 20 years, but also to work for the industry leader. Not least because I meet fellow Lufthansa employees every day who feel the same way.



Motivated employees as the ace up the sleeve?

Yes. We are a, if not the, benchmark for our competitors around the world when it comes to our passion and professionalism. They may not envy us for our staff costs, but certainly for the quality of our employees. These are, in my view, rather good conditions in which to at some point hand over a company to the next generation that is even better than it is today.