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July 17, 2024
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Christoph Franz, Lufthansa’s CEO, is getting ready to move to Roche, a Swiss pharma company.  The change at the top of one of Europe’s 9-18-2013 10-02-44 AMlargest airlines is something of a surprise. The Wall Street Journal reports that Dr Franz’s decision to move from the airline caught colleagues by surprise.Dr Franz has been with Lufthansa for 15 years.  But this is not his first foray outside the airline.  He started at Lufthansa in 1990, then moved to Deutsche Bahn (Germany’s railway) in 1994 and returned to Lufthansa in 2004 when he was appointed CEO of its subsidiary, Swiss International Air Lines. In 2009, Mr Franz became CEO of Lufthansa German Airlines, and deputy group chairman. He held these positions until January 2011 when he became group chairman and CEO.

The timing on this change is interesting. Lufthansa is expected to announce a big order for aircraft on Thursday.  The ~$10bn deal is anticipated to be for for both Airbus and Boeing aircraft.  The  777 and A350 are the aircraft likely to be be ordered. The airline has previously also expressed interest in the 787-10.  Lufthansa is considering replacement of the 747-400 and A340s in order to drive down fuel costs.

Besides being among the most analytical airlines (and influential) when it comes to fleet decisions, Lufthansa also makes fleet decisions with its its MRO, Lufthansa Technik, in mind.  Lufthansa has a large range of aircraft in its fleet because it focuses on “horses for courses”.  This policy provides Technik with experience on working on virtually every aircraft and engine combination.

The airline’s strategic overhaul is not expected to see changes.  There is a commitment from its management team to stick to the SCORE program and ensure Lufthansa remains profitable and competitive.  This unexpected CEO change should not have a huge impact on Lufthansa – the strategic plan is going to be to maintain its leading position in Europe. Cutting labor costs can be expected to be continued. Despite union friction with Mr Franz’s strategy, labor is the third highest cost. Fuel is first,  airport and ATC fees come next.  So the fleet revision is a priority and the new CEO can be expected to keep the company on its course.

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