What’s Deutsche Lufthansa Business Model?

Deutsche Lufthansa Aktiengesellschaft provides passenger and cargo air transportation services worldwide. The Company offers flight and connection programs in North America, Scandinavia, and Asia. Deutsche Lufthansa also provides travel agency, catering, and aircraft maintenance services.

What Deutsche Lufthansa is doing in more details?

Germany’s air ambassador Deutsche Lufthansa rivals the world’s largest airlines. Operating in about 530 subsidiaries and affiliated companies, the global aviation group runs Europe’s largest passenger airline.

Lufthansa Passenger Airlines operates a global route network of more than 315 destinations in over 100 countries with a fleet of almost 750 aircraft.

The company’s logistics is also a market leader in international airfreight transportation through Lufthansa Cargo. Lufthansa is also comprised of AirPlus, Lufthansa Aviation Training and offers IT services through Lufthansa Systems. The majority of Lufthansa’s sales come from Europe.

Where Deutsche Lufthansa is Operating?

Lufthansa operates five business segments, Network Airlines, MRO (maintenance, repair, and overhaul), Catering, Logistics, and Eurowings.

Network airlines segment consists of Lufthansa’s multi-hub airlines, Lufthansa Germany Airlines, SWISS, and Austrian Airlines. It offers premium and high-quality products and services, comprehensive route networks combined with highest level of travel flexibility. The segment generates more than 40% of sales.

Doing business as Lufthansa Technik, the MRO segment is one of the leading global providers of maintenance, repair, and overhaul services for civilian commercial aircraft. It accounts for nearly 25% of sales.

Catering provides in-flight food for more than 300 airlines with nearly 140 plants in over 45 countries, primarily under the LSG Sky Chefs brand. It accounts for almost 20 % of sales.

Logistics generates more than 5% of Lufthansa’s revenue. It consists of the airfreight container management specialist Jettainer group, the time:matters subsidiary, which specializes in particularly urgent consignments, and the equity investment in the cargo airline AeroLogic.

The Eurowings segment (less than 5% of sales) holds Lufthansa’s budget airline operations, providing low-cost, direct services under the Eurowings, Germanwings, and Eurowings Europe banners. It also includes Brussels Air and Lufthansa’s equity investment in SunExpress.

Overall, Traffic generates more than 65% of Lufthansa’s Revenue.

Where is the geographical reach of Deutsche Lufthansa?

Cologne, Germany-based Lufthansa’s largest market is Europe, which generates nearly60% of total revenue. North America generates nearly 20%, and the Asia/Pacific region more than 15%. Lufthansa also generates revenue in Central and South America, the Middle East, and Africa.

What is Deutsche Lufthansa’s Sales and Marketing Strategy?

Lufthansa sells flight tickets and related ancillary services primarily via agents, websites, or other airlines in the course of interlining. The number of passengers it carries declined to about 36 million from more than 140 million passengers in 2019 due to a decline of over 67% in the number of flights.

What is Deutsche Lufthansa Financial Performance?

Note: Growth rates may differ after conversion to US Dollars.

Lufthansa’s sales have been fluctuating over the last five years. Net income followed the same trend with a recorded net loss in the most recent fiscal year.

In 2020 the airline saw a decline in its sales by 63% to ?13.6 billion. This was due to the decline in all its business segments except in Logistics. Traffic revenue for the Lufthansa Group airlines fell by 68% year-on-year to ?9.1 billion in the financial year 2020.

Net result attributable to shareholders of Deutsche Lufthansa AG fell to a net loss of ?6.7 billion compared to a net income of ?1.2 billion in the prior year. It was burdened by impairment losses on the fleet and goodwill as well as the negative changes in the market value of fuel hedging instruments.

Lufthansa’s cash position increased in 2020, ending the year ?389 million higher at ?1.8 billion. Lufthansa’s operating activities used cash of ?2.3 billion, and its investing activities used ?962 million and its financing activities provided ?5.1 billion. Main cash uses were for purchase of securities, and capital expenditures.

What is Deutsche Lufthansa Future Strategy?

Lufthansa Group’s strategy consists of:

Market position as a leading European airline group to be strengthened by coping successfully with the coronavirus crisis; Airlines form the core of the Lufthansa Group; Focus is on restructuring, consistent attention to customer needs and long-term increases in profitability and cash flow; and Sustainability and corporate responsibility.

The financial strategy of the Lufthansa Group seeks to increase its company value in a sustainable manner. It will concentrate on three dimensions: improving profitability, focusing capital allocation and maintaining financial stability.

What is Deutsche Lufthansa’s History?

The Weimar government created Deutsche Luft Hansa (DLH) in 1926 by merging private German airlines Deutscher Aero Lloyd (founded 1919) and Junkers Luftverkehr (formed in 1921 by aircraft manufacturer Junkers Flugzeugwerke).

DLH built what would become Europe’s most comprehensive air route network by 1931. It served the USSR through Deruluft (formed 1921; dissolved 1941), an airline jointly owned by DLH and the Soviet government.

In 1930 DLH and the Chinese government formed Eurasia Aviation Corporation to develop air transport in China. DLH established the world’s first trans-Atlantic airmail service from Berlin to Buenos Aires in 1934 and went on to develop air transport throughout South America.

The outbreak of WWII ended operations in Europe, and the Chinese government seized Eurasia Aviation in 1941. Klaus Bonhoeffer, head of DLH’s legal department, led an unsuccessful coup against the Nazi leadership and was executed in 1945. Soon afterward all DLH operations ceased.

In 1954 the Allies allowed the recapitalization of Deutsche Lufthansa. The airline started with domestic routes, returned to London and Paris (1955), and then re-entered South America (1956). In 1958 it made its first nonstop flight between Germany and New York and initiated service to Tokyo and Cairo.

Meanwhile, it started a charter airline with several partners in 1955. Lufthansa bought out its partners in 1959 and renamed the unit Condor two years later. The carrier resumed service behind the Iron Curtain in 1966 with flights to Prague.

The stable West German economy helped Lufthansa maintain profitability through most of the 1970s. The reunification of Germany in 1990 ended Allied control over Berlin airspace, allowing Lufthansa, which had bought Pan Am’s Berlin routes, to fly there under its own colors for the first time since the end of WWII.