On November 14, 2024, Lufthansa, the German flag carrier, announced plans to reduce its administrative workforce by 20%, affecting approximately 400 positions, as reported by Manager Magazine. This strategic downsizing is part of a broader initiative to enhance operational efficiency and address the airline's financial challenges, particularly in the wake of a projected operating loss of 800 million euros by 2026 if current trends persist. The decision to cut jobs in the administration sector aims to streamline operations, focusing on cost reduction through attrition and increased automation.
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The airline has been facing a decline in operating profit, with a 9% drop in the third quarter, attributed to low yields, intensified competition from international airlines, and rising operational costs. Lufthansa's move reflects an industry-wide trend towards leaner administrative frameworks to improve profitability in a highly competitive environment. Lufthansa's CEO, Carsten Spohr, has been vocal about the need for a "fitness program" to rejuvenate the core brand. This program includes job cuts and emphasizes leveraging digital technologies such as artificial intelligence to optimize administrative processes. The airline has imposed a hiring freeze in its administrative departments as a precursor to these reductions, which will be achieved through natural staff turnover rather than forced layoffs, where possible.
The planned reduction comes at a time when the aviation industry is grappling with post-pandemic recovery, geopolitical tensions affecting fuel prices, and a push towards more sustainable operations. Lufthansa's strategy also involves savings in purchasing and a concerted effort to revive business travel, which has not fully recovered to pre-COVID levels. The airline is aiming for an increase in operating profit by 2.5 billion euros by 2028, with these job cuts playing a critical role in achieving that target.
This move has not been without controversy, as it follows a history of Lufthansa's efforts to reduce its workforce, particularly during the economic fallout of the coronavirus crisis. The airline has previously made significant cuts, including reducing its fleet and leadership positions. While the specific details of the new cuts are yet to be fully disclosed, the implications for employee relations and potential union negotiations will be closely watched, given Lufthansa's past engagements with its workforce on restructuring efforts.