Exclusive – LH Cargo Announces Radical Redesign

The German freight carrier is heading for a new structure. It’s the first fundamental reorganization for more than ten years. All planned changes are aimed at making Lufthansa Cargo leaner, more efficient and getting it closer to the market.

More regional competencies will be concentrated at LH Cargo’s head office  -  company courtesy
More regional competencies will be concentrated at LH Cargo’s head office - company courtesy

At LH Cargo, a major chair-moving process will start very soon, after the top management informed the staff this morning (12 Sep) via internal channels which restructuring measures will be taken to enhance the competitiveness of the freight airline in the coming years and maneuver it back into the black. All intended steps are part of the so called ‘C40’ stiff cost cutting program that targets perpetual annual savings of €80 million. 

These are the core elements of the reform: a more streamlined and powerful organizational structure, flatter hierarchies by reducing overheads, cutting down of management  levels and a realignment of sales structures by combining competencies. 

Cutting one management level
In total, up to 35 percent of leadership positions will be axed in the coming months, LH Cargo employees were told. This implies the end of regional head offices, such as the Scandinavia representation located in Sweden, to mention just one example. Soon, the competencies of the Stockholm-based office will be integrated in a newly created “Region Eastern & Northern Europe,” covering the associated sub-markets. The same accounts for “Western Europe,” “Middle East/Africa” and the core “Region Germany,” with all mentioned units to be based at LH Cargo’s Frankfurt headquarters.

In Asia, Shanghai will take over sales responsibilities for the northern area, while Singapore will keep in charge for the southern Asian markets, including the Indian Subcontinent. This and the cutting of one managerial level implies a faster flow of information from the areas to Head of Sales Alexis von Hoensbroech.

A look at Africa exemplifies the changes: So far, East Africa Chief Ivo Seehann had to report to Johannesburg-based Africa Director Hermann Zunker, who passed on the information to Frankfurt’s headquarters. In future, Ivo will be in direct contact to FRA.

Similarly, with the Dubai station which previously had reported to Delhi, with Delhi passing on the information to Singapore and Singapore’s managers, after bundling all regional data, forwarded them to the freight airlines’ Frankfurt HQ.

A complicated and time-consuming communication flow involving (too) many parties. In future, Dubai gets in direct contact to the FRA-based area management Middle East/Africa.  
No changes at country levels
Finally, the carrier’s traditional America activities, led up to now by their office in Atlanta, will be split in two, with the U.S. and Canada managed from ATL, while Latin America gets a new sphere of influence stretching from Mexico, the Caribbean to Tierra del Fuego, headed by the carrier’s Sao Paulo office.

Lufthansa Cargo stresses that in contrast to their job cutting at managerial levels their country representations are going to gain even more importance and the number in touch with customers will not change significantly. Head of Communication Michael Goentgens states: “It was an important goal of the reorganization to further strengthen our local sales teams, because it’s them and their teams that are in daily contact with our clients.” He further told CargoForwarder Global that all management jobs that will see structural or functional modifications of more than 30 percent will be competitively tendered – according to the LH Group policy. 
Novo replaces Krasno
Apart from the announced major structural and organizational changes, LH Cargo also plans to stop landing at Siberian Krasnoyarsk Yemelyanovo Airport for refueling their MD-11 freighters which they have done since 2008 as an outcome of a severe conflict over traffic rights with the Russian Transport Ministry. Instead, as of 31 October the German freight carrier will utilize Novosibirsk Tolmachevo for refilling their aircraft with kerosene on sectors flown between Europe and Far East . This move applies to 9 services per week between Frankfurt and Shanghai and Guangzhou respectively.

“Novosibirsk’s infrastructure is more advanced compared to Krasnoyarsk. There, we can shift some work packages to local service providers, whereas in Krasnoyarsk we needed own personnel and also equipment like deicing machines to enable smooth and safe operations,” explains LH spokesman Andreas Pauker the forthcoming change of flight plans.      

Heiner Siegmund 

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