Fidest – Agenzia giornalistica/press agency

Quotidiano di informazione – Anno 33 n° 335

Lufthansa faces more cost-cuts

Posted by fidest press agency su mercoledì, 6 Maggio 2015

LufthansaIf you are after an expert comment on the latest news that Lufthansa faces more cost-cutting measures in spite of profits improvements, Loizos Heracleous Professor of Strategy at Warwick Business School has made the following comments:”The aviation industry is notoriously difficult to make money in. With the unpredictability in oil prices, relatively low barriers to entry, overcapacity, a commoditized offering, low operational flexibility in terms of efficient utilisation of heavy assets, often unionised personnel and intense competition, this is an industry that has not covered its cost of capital since its founding. Both the passenger transportation as well as freight transport segments suffer from such structural constraints. “In such an environment, efficiency becomes crucial, even for full service carriers. Lufthansa has a comparatively high cost base in relation to not only budget carriers, but also to most full service airlines.”Therefore the effort to reduce costs is a necessary step to remain competitive. A sustained and successful effort in that regard, combined with efforts to raise its service excellence profile (Lufthansa has a four-star rating by Skytrax out of a maximum of 5) would be the way to go, and may help to raise Lufthansa’s share price to the highs of one year ago.


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