The outgoing boss of Lufthansa has voiced concern over the threat posed by fast-growing Gulf carriers to Europe’s traditional airlines.
Christoph Franz, who stands down as chief executive at the end of April, told the Financial Times: “In the beginning we were talking about a competitive threat on paper – now we are talking about reality in our markets.”
He has used his position to warn repeatedly of the threat of “unfair competition” from the Middle East and the risk to European jobs if politicians see airlines only as a cash-cow instead of a catalyst for growth.
“As a stock-listed company, whatever the political framework is, we have to adapt. If we cannot survive in the existing framework, then yes we will have to shrink to a point where we rebalance the company,” he said.
“I don’t predict that there will be no more aviation if the big European hub carriers don’t exist. But it means that we will have only one-fifth of the value creation and one-fifth of the jobs located here in Europe.”
Lufthansa has so far held back from codeshare or alliance partnerships with Gulf airlines, unlike others in Europe.
“We have the feeling that teaming up with our colleagues in the Middle East would not be beneficial for us,” Franz said.
“We are already offering a lot of non-stop services [to Asia] so teaming up with someone else … is less attractive.”
Instead, Lufthansa must counter the Gulf threat by boosting the quality of its service on long-haul routes, he said.
Franz launched a €1.5 billion, three-year cost-cutting drive in 2012. It encompassed some 3,500 job cuts, transferring non-hub services to Lufthansa’s low-cost subsidiary Germanwings, restructuring Austrian Airlines and closing some locations.
Lufthansa pilots voted on Friday to go on strike over a pay and working conditions dispute, despite Franz talking of a “new willingness to embrace change” at the airline.
Franz said the company cannot afford to let up with reforms.
“We have substantially improved our bottom line … but if you look at absolute margin that we achieve in our airline business it’s also obvious that we have still not only room to improve but the necessity to improve.”