Lufthansa Cargo has downsized its executive team from 4 to 3. The victim is the finance department managed until April 2020 by Martin Schmitt, whose duties have meanwhile been taken over
by CEO Peter Gerber on an interim basis. Internal sources expect that a successor for Mr. Schmitt as CFO will not be appointed in order to reduce expenditures.
The downsizing of the leadership team, officially announced by the LH Group today (07JUL20), is a result of the updated cost-cutting measures imposed by the Lufthansa Board of Directors tabled
this morning. These measures affect all group members and subsidiaries and are aimed at reducing costs, enabling the LH Group to become competitive again.
In the case of LH Cargo, besided the streamlining of the Exect Board the restructuring program demands the axing of 500 jobs by 2023, bringing employee numbers down from currently 4,500 to 4,000. With regard to the corporate culture, it can be assumed that a large part of the reduction will mainly be achieved through natural attrition, age-related retirements, and recruitment freezes. Whether additional redundancies are necessary beyond these measures to push costs down further remains to be seen.
As for former CFO, Martin Schmitt: he left his post at LHC in April already and has meanwhile been integrated into the finance department of Cargo parent, Lufthansa Passage Airline, where people who calculate with a sharp pencil are strongly required.
This, because the updated restructuring program dubbed “ReNew” goes far beyond the first set of measures announced in early April, aimed primarily at reducing the airline’s future fleet by taking 100 aircraft out of operations. Headed by Detlef Kayser, Member of the Lufthansa Group Executive Board, “ReNew” follows the approval by the airline’s shareholders of the German government’s cash injection totaling up to 9 billion euros to prevent Lufthansa from going bankrupt, backed by financial commitments made by Austria and Switzerland to secure the existence of Lufthansa Group members AUA and Swiss respectively.
These are the “ReNew” bullet points:
- The executive boards and management bodies of all Lufthansa subsidiaries will be reduced in size. In a first step, this affects Lufthansa Cargo (as described above), the LSG Group, and Lufthansa Aviation Training. The decision is based on the downsizing of the Executive Board of Lufthansa from formerly 7 to 5 members.
- The number of leadership positions will be reduced by 20% throughout the Group.
- 1,000 jobs will be axed in administration departments throughout the Group.
- Transforming the Lufthansa Airline into a separate corporate entity will be sped up with the aim of building a holding structure.
- Subsidiary fleets will be reduced, flight operations bundled, aimed at streamlining the long and short-haul leisure business at FRA and MUC. At Lufthansa alone, 22 aircraft have already been phased out ahead of schedule, including six Airbus A380s, eleven Airbus A320s and five Boeing 747-400 jetliners.
- Last but not least, the financial forecast for 2023 provides for renewing the fleet by max 80 new aircraft into the Lufthansa Group carriers’ fleets. This will reduce the investment volume for new aircraft by half.
Fiege to handle Lufthansa Cargo shipments in FRA
Furthermore, the top management assures to avoid layoffs wherever possible. However, “this requires agreements on crisis-related measures with unions and social partners representing the Lufthansa employees,” states the release.
In a separate move, Lufthansa Cargo said that "Fiege Air Cargo Logistics”(FACL) will take over the operative handling and co-ordination of inbound and outbound standard shipments at its Cargo Center at Rhine-Main Airport in several phases until mid-2021. The physical cargo handling processes in the LCC had already been largely outsourced to various external service providers for many years, the carrier states.
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