Airline to "resort to painful measures" - Franz
Lufthansa has announce plans to launch a "painful" €1bn cost cutting programme after suffering a string of poor financial results.
The airline's new ceo Christoph Franz told staff in a letter that 20% of the workforce would be cut "in the medium term".
The plan called CLIMB 2011 aims to safeguard Lufthansa's future earnings by the end of 2011 by further reducing costs.
"We have no other alternative but to resort to painful measures," Mr Franz said.
"We have held intensive talks on the Airlines Board on the concrete measures which we intend to put before you in the coming weeks.
"We will implement that programme responsibly and with circumspection in the best Lufthansa tradition.
"But we must make the necessary changes now with the utmost vigour and determination."
Mr Franz said the current economic crisis had exposed Lufthansa's weaknesses in the face of falling demand and yields.
He called for costs to be reduced to better enable the carrier to compete with its European rivals on fares.
Mr Franz said Lufthansa had not earned enough to cover its costs this year resulting in a loss in the first three months of 2009.
He said: "Publication of the first-half figures at the end of this month will show that this negative trend is continuing.
"Unless market conditions change, our losses will increase significantly in the coming year owing especially to the rise in fuel prices."
Mr Franz said current measures to combat the airline crisis were not enough and that "ever more determined efforts" were needed.
He added: "I took over as ceo Lufthansa German Airlines only a few days ago and I would have sincerely liked to give you more pleasant news.
"That is sadly not possible in these turbulent times. We must now master the immense challenges confronting us."
Mr Franz recently took over as ceo of Lufthansa's passenger airline operations from Wolfgang Mayrhuber who continues as ceo of the Lufthansa Group.
Last month Lufthansa reported a continuing fall in lucrative premium traffic.
Lufthansa said it had cut capacity by 2.6% and retired 23 planes during the current crisis. There are likely to be further capacity cuts later this year.
The airline also announced that it was raising its fuel charges. Its fuel bill for the year is expected to rise from a forecast in April of €3.4bn to €3.55bn.
In April Lufthansa reported a €44m operating loss in the first quarter of 2009.
It blamed the loss on the global recession and a poor trading environment.
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