Lufthansa low-cost strategy

Full-risk towards the future

Georg Jegminat
Georg Jegminat

Eurowings should become one of the pillars of the Lufthansa Group. This is a difficult task and a big risk but is probably the group’s only chance to succeed in the long run.

The new Eurowings will start in November with several disadvantages. Ryanair has more than 320 jets and ordered 380 more. Easyjet has 230 planes and is adding one a month. Eurowings will only have 86 planes at the start. Another problem: many markets are already occupied, for example by Vueling, Wizzair and Norwegian. Eurowings will have to fly in a price-driven market.

But the carrier isn’t without a chance. LH chief Carsten Spohr wants to expand the fleet to 240 planes by end-2017 through franchises, holdings or takeovers. The exact strategy of the new Eurowings isn’t really clear yet. Can it really develop independently of its sister airlines? Many of its managers are from network airlines. Can they really do low-cost? The previous attempts of BA (with Go) and KLM (with Buzz) ended in sell-offs to Ryanair and Easyjet.

So it’s going to be a tough job for Lufthansa’s Karl-Ulrich Garnadt. But if he fails to make Eurowings into a relevant player it would have serious consequences for Lufthansa. The group would not only be weakened in Europe but it would be open to attack in Germany as well. So little Eurowings is carrying a heavy responsibility.

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