Lufthansa has warned it must continue to cut costs as increased competition, ongoing pilots’ strikes and falling ticket prices hit the airline’s annual profits last year.
Profits dropped around 11 per cent in 2014 to €252 million at its core German airlines division, made up of the Lufthansa and Germanwings brands.
It reported a €55 million net profit last year down 82 per cent from 2013, however the results were boosted by falling oil prices.
The German carrier’s CEO Carsten Spohr is planning on cutting costs by transferring more services to its low-cost subsidiary Eurowings, where pilots’ wages are lower compared with the group’s mainline business.
However, Lufthansa pilots resisted the changes and went on strike for a total of 15 days last year. The airline said this “eroded” €232 million of the operating result.
Spohr said the results “reconfirm that sticking to uneconomical structures is not an option for our future”.
“We have substantially improved our products and services, and we’ve further raised the quality of our group member carriers. We’re back among the world’s best airlines in the eyes of our customers.
“What we need to do now is lay the foundations on which we can regain a leading position in our industry in economic terms, too.”
“After the safety of our flight operations, it’s ensuring our future viability that is our paramount priority,” he added.
Lufthansa said its cost cutting programme called SCORE contributed €2.5 billion to the group’s finances over the past two years, however the results have been “almost entirely nullified” by adverse trends over the same period, such as cost inflation and yield declines.