With corporate travelers in short supply, the airline isn’t able to compensate for seasonal demand fluctuations
Jul 12, 2024
Lufthansa plans to slash costs and cut back on future projects as a “new reality” of lower corporate travel and increased competition drives down fares from post-pandemic highs. The carrier said that while its costs have risen sharply, unit revenue has been lower than expected as customers aren’t prepared to pay higher fares.
Key takeaways
- “We are experiencing a ‘new reality’: not a crisis, but a structural change – a normalization in the market, accompanied by high competitive pressure” Chief Executive Officer Jens Ritter wrote in the letter to employees;
- The airline expects business travel to remain at its current low level, and to see more leisure travelers visiting friends and relatives, or going on vacation. As a result, travel is skewed toward the summer instead of the winter, according to the letter;
- Across Europe and the US, airlines are struggling to fill planes in the all-important summer vacation season, which has dragged down ticket prices. On Thursday, Delta Air Lines Inc. warned of worse-than-expected financial results and a weak outlook for the third quarter.
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