Lufthansa faces falling ticket prices in its key transatlantic market amid rising competition from both Chinese and US rivals, the German airline's chief financial officer told reporters today.
Lufthansa's key Asian flights are becoming less profitable as Chinese airlines muscle in on the long-haul market, Joerg Beissel said at a news conference in Frankfurt.
"The second challenge we face is in North America, that we can only fill economy class with large discounts," as North American rivals are flying direct to holiday destinations in Europe, eating into Lufthansa's market share, added Beissel.
That is in part because US airlines have reallocated capacity after scaling back Chinese flights due to competition.
"If you summarise this, then the increased costs and decreased revenue make it clear that we need a structural response" to achieve an 8% profit margin goal, said Beissel.
Lufthansa last month warned of a fall in third-quarter earnings as the group that also includes Swiss International Air Lines, Austrian Airlines and Eurowings grapples with higher wage costs and a squeeze on ticket prices.
Lufthansa CEO Jens Ritter wants to get the brand back on track with a turnaround programme that includes service improvements.
Going forward, the airline wants to invest €100m a year in products and services, Ritter said at the same event.
The number of flights and aircraft types is to be reduced, and Lufthansa plans to work with another airline in summer to help cover seasonal fluctuations.
Higher airport costs in Germany, recently criticised by budget rival Ryanair as well, are also hitting Lufthansa, according to Ritter.
"We are one of the most expensive locations here in Germany, and we expect our partners to support and contribute to the turnaround," he said, adding the government, airport managers and airlines must succeed in making Germany attractive.
