German airline group Lufthansa announced on Monday that it will cut 4000 jobs at administrative level by 2030 and set higher profit margins as it wants to become more efficient via digitalisation and automation, a Reuters report said. The news led to a boost in investor confidence, as the company’s shares rose by 2% in early trading on Monday.
The airline said that it has faced cost pressures and labour disputes in recent years, forcing it to issue two profit warnings last year. It had also dropped its earlier goal of reaching an 8% operating margin. Now, Lufthansa says it is still aiming for that target, but only by the ends of the decade.
Fresh profit targets and cost control?
Lufthansa laid out its new mid-term goals on Monday. The group now expects an adjusted operating margin of 8-10% from 2028, higher than the earlier 8% target, a Reuters report said. It further added that the Group also plans to generate more than 2.5 billion euros ($2.9 billion) in free cash flow every year.
To achieve this, the airline will reduce about 20% of its non-operational staff, mainly in Germany, and the cuts will be carried out in consultation with social partners. Executives said it is easier to manage costs at bases outside Germany, such as Rome, where Lufthansa’s minority-owned airline ITA Airways operates.
Over 230 aircrafts to be added by 2030 amid job cuts
Amid the job cuts, Lufthansa is planning to add more than 230 new aircraft by 2030 and improve cooperation among its airlines to increase returns. The group said that this integration would allow it to invest more in profitable subsidiaries while moving resources away from high-cost divisions if necessary.
Lufthansa stressed that these changes are part of a larger turnaround programme announced last year, designed to reassure investors that the airline is on the path to long-term stability and growth.