News / Lufthansa Cargo to axe 800 jobs in a bid to save costs and prop up falling revenue

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Lufthansa Cargo told staff on Friday that up to 800 of them would lose their jobs as the carrier attempts to stem its losses.

Between 450 and 500 jobs will be lost in Germany and the remainder elsewhere, but the carrier said the job cuts would be “as socially acceptable as possible”.

The cuts, part of the carrier’s C40 plan to save €80m a year, will account for €55m, while a further €25m will be cut from service providers.

“We will prepare the implementation of these cost measures over the coming months and provide our company with a new, leaner organisational structure based on our customers’ needs,” said spokesman Michael Goentgens.

“C40 will help us to achieve competitive unit costs. At the same time, we want to make it significantly easier to deal with Lufthansa Cargo by making processes more efficient at customer touch points. Lufthansa Cargo’s global network reach and capacity offer will not change.”

He added: “Lufthansa Cargo has a clear aim: we want to be the first choice for airfreight. Our focus is on the needs of our customers. We want to be a reliable, top-quality and uncomplicated business partner for them. To achieve this, we have adjusted our strategy and summarised it under the name CARGO eVOLUTION.”

The LC strategy rests on four pillars, one of which is cost cuts. The carrier also aims to open up new customer markets and is introducing new products and services, including MyAirCargo, by which private individuals can send personal items by air freight. It is also looking at how it can capture more e-commerce volumes.

The third pillar aims to boost Lufthansa’s network via partner carriers, which now comprise ANA, United and Cathay Pacific.

Finally, the carrier wants to lead the way in digitisation: “We want to digitise our core processes and touch points with all of our key partners. We will thus increase quality, speed and efficiency within the transport chain.

“We are targeting the future potential offered by new technologies such as cloud solutions and we want to play a pioneering role within the entire industry in this area.”

Lufthansa Cargo saw revenue fall 21.8% to €480m in the first quarter, leading to an EBIT loss of €19m. Last year revenue fell more than 3% to €2.3bn, giving the logistics business unit an EBIT of €3m for 2015 – 97% down on the year before.

The company said in its first-quarter announcement it was “bracing itself for a challenging financial year: the adjusted EBIT is now expected to be significantly below its 2015 level”.

Market sources indicated that Lufthansa Cargo had recently cut its pricing to very low levels, as it attempts to win back volumes, but at a high cost to revenue. But one senior air freight forwarder explained: “It has only been on selected flights, and where they have excess capacity. Freighters have not been included in this.”

Lufthansa Group CFO Simone Menne, meanwhile, resigned on Friday after four years in the job. She leaves on August 31 to pursue other career options.