Lufthansa

Deutsche Lufthansa AG (), commonly shortened to Lufthansa, is the flag carrier of Germany. When combined with its subsidiaries, it is the second- largest airline in Europe in terms of passengers carried. Lufthansa is one of the five founding members of Star Alliance, the world's largest airline alliance, formed in 1997.

Besides its own services, and owning subsidiary passenger airlines Austrian Airlines, Swiss International Air Lines, Brussels Airlines, and Eurowings (referred to in English by Lufthansa as its ''Passenger Airline Group''), Deutsche Lufthansa AG owns several aviation-related companies, such as Lufthansa Technik and LSG Sky Chefs, as part of the Lufthansa Group. In total, the group has over 700 aircraft, making it one of the largest airline fleets in the world.

Lufthansa's registered office and corporate headquarters are in Cologne. The main operations base, called Lufthansa Aviation Center, is at Lufthansa's primary hub at Frankfurt Airport, and its secondary hub is at Munich Airport where a secondary ''Flight Operations Centre'' is maintained.

The company was founded as Luftag in 1953 by staff of the former Deutsche Luft Hansa that had been politically connected to the government of Nazi Germany and dissolved after World War II. Luftag continued the traditional branding of the German flag carrier by acquiring the Luft Hansa name and logo.

History

1950s: Post-war (re-)formation

Lufthansa traces its history to 1926 when Deutsche Luft Hansa A.G. (styled as ''Deutsche Lufthansa'' from 1933 onwards) was formed in Berlin. DLH, as it was known, was Germany's flag carrier until 1945 when all services were terminated following the defeat of Nazi Germany; it has since been demonstrated that Deutsche Luft Hansa relied on the use of forced labor and housed forced laborers on the site of Tempelhof airport. In an effort to create a new national airline, a company called Aktiengesellschaft für Luftverkehrsbedarf (Luftag), was founded in Cologne on 6 January 1953, with many of its staff having worked for the pre-war Lufthansa; this included Kurt Weigelt, a Nazi convicted of war crimes, who served on the board on the new Lufthansa, and Kurt Knipfer, a member of the Nazi party from 1929 who led Luft Hansa from 1933 to 1945.

West Germany had not yet been granted sovereignty over its airspace, so it was not known when the new airline could become operational. Nevertheless, in 1953 Luftag placed orders for four Convair CV-340s and four Lockheed L-1049 Super Constellations and set up a maintenance base at Hamburg Airport. On 6 August 1954, Luftag acquired the name and logo of the liquidated Deutsche Lufthansa for DM 30,000 (equivalent to € today), thus continuing the tradition of a German flag carrier of that name.

On 1 April 1955 Lufthansa won approval to start scheduled domestic flights, linking Hamburg, Düsseldorf, Frankfurt, Cologne, and Munich. International flights started on 15 May 1955, to London, Paris, and Madrid, followed by Super Constellation flights to New York City from 1 June of that year, and across the South Atlantic from August 1956. In August 1958 fifteen Lufthansa 1049Gs and 1649s left Germany each week to Canada and the United States, three 1049Gs a week flew to South America, three flew to Tehran and one to Baghdad. In parallel, the airline also initiated a marketing campaign to sell itself and West Germany. The challenges involved encouraging travelers to consider visiting the country in the wake of World War II, as well as offering services to other nations via the Frankfurt airport hub. More specifically, Lufthansa's efforts shaped and reflected the development of a modern form of consumerism and advertising through the sale of air travel. By 1963, the airline, initially limited in its public relations efforts, had become a major purveyor of West Germany's image abroad.

The special status of Berlin meant that Lufthansa was not allowed to fly to either part of Berlin until German reunification in 1990. Originally thought to be only a temporary matter (and with intentions to move the airline's headquarters and main base there once the political situation changed), the Division of Germany turned out to be longer than expected, which gradually led to Frankfurt Airport becoming Lufthansa's primary hub.

East Germany tried to establish its airline in 1955 using the ''Lufthansa'' name, but this resulted in a legal dispute with West Germany, where Lufthansa was operating. East Germany instead established Interflug as its national airline in 1963, which coincided with the East German Lufthansa being shut down.

1960s: Introduction of jetliners

In 1958 Lufthansa ordered four Boeing 707s and started jet flights from Frankfurt to New York City in March 1960. Boeing 720Bs were later bought to back up the 707 fleets. In February 1961 Far East routes were extended beyond Bangkok, Thailand, to Hong Kong and Tokyo. Lagos, Nigeria, and Johannesburg, South Africa were added in 1962.

Lufthansa introduced the Boeing 727 in 1964 and that May began the Polar route from Frankfurt to Tokyo via Anchorage. In February 1965 the company ordered twenty-one Boeing 737s that went into service in 1968. Lufthansa was the first customer for the Boeing 737 and was one of four buyers of the 737-100s (the others were NASA, Malaysia-Singapore Airlines, and Avianca – while the NASA airframe was the first built, it was the last delivered and originally intended for delivery to Lufthansa). Lufthansa was the first foreign launch customer for a Boeing airliner.

1970s–1980s: The wide-body era

The wide-body era for Lufthansa started with a Boeing 747 flight on 26 April 1970. It was followed by the introduction of the DC-10-30 on 12 November 1973, and the first Airbus A300 in 1976. In 1979 Lufthansa and Swissair became launch customers for the Airbus A310 with an order for twenty-five aircraft.

The company's fleet modernization programme for the 1990s began on 29 June 1985, with an order for fifteen Airbus A320s and seven Airbus A300-600s. Ten Boeing 737-300s were ordered a few days later. All were delivered between 1987 and 1992. Lufthansa also bought Airbus A321, Airbus A340, and Boeing 747-400 aircraft.

In 1987 Lufthansa, together with Air France, Iberia, and Scandinavian Airlines, founded Amadeus, an IT company (also known as a GDS) that would enable travel agencies to sell the founders and other airlines' products from a single system.

Lufthansa adopted a new corporate identity in 1988. The fleet was given a new livery, while cabins, city offices, and airport lounges were redesigned.

1990s–2000s: Further expansion

On 28 October 1990, 25 days after reunification, Berlin became a Lufthansa destination again. On 18 May 1997, Lufthansa, Air Canada, Scandinavian Airlines, Thai Airways International, and United Airlines formed Star Alliance, the world's first multilateral airline alliance.

At the beginning of 1995, Lufthansa made some structural changes aimed at creating independent operating companies of the aviation group, such as Lufthansa Technik, Lufthansa Cargo and Lufthansa Systems. Three new companies who joined later in the Lufthansa Group were LSG Sky Chefs, Condor and Lufthansa CityLine.

In 1999, Lufthansa participated in the German Business Foundation initiative addressing class action lawsuits against German companies for World War II-era misdeeds, including the use of forced labor, by reportedly paying 10s of millions German marks. The same year, Lufthansa commissioned the scholar Lutz Budrass to investigate the use of forced labor by its predecessor company, Deutsche Luft Hansa, during World War II; it declined to publish Dr. Budrass's resulting study for more than a decade.

In 2000, Air One became a Lufthansa partner airline and nearly all Air One flights were code-shared with Lufthansa until Alitalia purchased Air One. Lufthansa has a good track record for posting profits, even in 2001, after 9/11, the airline suffered a significant loss in profits but still managed to stay 'in the black'. While many other airlines announced layoffs (typically 20% of their workforce), Lufthansa retained its current workforce.

On 6 December 2001, Lufthansa announced an order for 15 Airbus A380 superjumbos with 10 more options, which was confirmed on 20 December. The A380 fleet would be used for long-haul flights from Frankfurt exclusively.

In June 2003, Lufthansa opened Terminal 2 at Munich's Franz Josef Strauß Airport to relieve its main hub, Frankfurt, which was suffering from capacity constraints. It is one of the first terminals in Europe partially owned by an airline.

On 17 May 2004, Lufthansa became the launch customer for the Connexion by Boeing in-flight online connectivity service.

In autumn 2003, the implementation of a new sales strategy initiated by then-incumbent Executive Vice President Thierry Antinori to make the company fit for the digital era led to the abolition of commission payments for travel agencies and led to a revolution in the German travel business with many travel agencies disappearing from the market on the one hand, and the rise of new digital distribution platforms on the other hand.

On 22 March 2005, Swiss International Air Lines was purchased by Lufthansa's holding company. The acquisition included the provision that the majority shareholders (the Swiss government and large Swiss companies) be offered payment if Lufthansa's share price outperforms an airline index during the years following the merger. The two companies will continue to be run separately.

On 6 December 2006, Lufthansa placed an order for 20 Boeing 747-8s, becoming the launch customer of the passenger model. The airline is also the second European airline to operate the Airbus A380 (after Air France). The first A380 was delivered on 19 May 2010, while the first 747-8 entered service in 2012.

In September 2008, Lufthansa Group announced its intent to purchase a stake in Brussels Airlines (SN). In June 2009, the EU Commission granted regulatory approval and Lufthansa acquired 45% of SN. In September 2016, Lufthansa announced it would purchase the remainder of Brussels Airlines for €2.6 million euros. The transaction was completed in early January 2017. The decision was partially taken after the Brussels airport bombings of March 2016, which caused SN to lose almost €5 million per day until 3 April.

In September 2009, Lufthansa purchased Austrian Airlines with the approval of the European Commission.

On 11 June 2010, Airbus A380 service between Frankfurt and Tokyo ( Narita) started.

2010s: Belt-tightening

After a loss of 381 million euros in the first quarter of 2010 and another 13 million loss in the year 2011 due to the economic recession and restructuring costs, Deutsche Lufthansa AG cut 3,500 administrative positions or around 20 percent of the clerical total of 16,800. In 2012, Lufthansa announced a restructuring program called SCORE to improve its operating profit. As a part of the restructuring plan, the company started to transfer all short-haul flights outside its hubs in Frankfurt, Munich, and Düsseldorf to the company's re-branded low-cost carrier Germanwings.

In September 2013, Lufthansa Group announced its biggest order, for 59 wide-body aircraft valued more than 14 billion euros at list prices. Earlier in the same year, Lufthansa placed an order for 100 next-generation narrow-body aircraft.

The group has had a long-standing dispute with the Vereinigung Cockpit union which has demanded a scheme in which pilots can retire at the age of 55, and 60% of their pay be retained, which Lufthansa insists is no longer affordable. Lufthansa pilots were joined by pilots from the group's budget carrier Germanwings to stage a nationwide strike in support of their demands in April 2014 which lasted three days. The pilots staged a six-hour strike at the end of the summer holidays in September 2014, which caused the cancellation of 200 Lufthansa flights and 100 Germanwings flights.

During the course of the 2014 FIFA World Cup, part of the fleet was branded "Fanhansa".

In November 2014, Lufthansa signed an outsourcing deal worth $1.25 billion with IBM that will see the US company take over the airline's IT infrastructure services division and staff.

In June 2015, Lufthansa announced plans to close its small long-haul base at Düsseldorf Airport for economic reasons by October 2015. At the time, the base consisted of two Airbus A340-300s rotating between Newark and Chicago. As a result, service to Chicago from Düsseldorf was first made seasonal, suspended for the winter 2015 season, and then canceled altogether. Service to Newark, however, was initially maintained. From the winter 2015 schedule through the end of the winter 2016 schedule, Düsseldorf was served by aircraft which also flew the Munich-Newark route. The Düsseldorf-Newark route ended on 30 November 2018, which was operated with an Airbus A330-300 aircraft. Their base was officially closed in March 2019.

On 22 March 2016, Lufthansa ended Boeing 737-500 operations. The airline's last Boeing 737 (a 737-300) was retired on 29 October 2016, after a flight from Milan to Frankfurt. Lufthansa operated the 737 in several variants for almost 50 years, the first aircraft having been delivered on 27 December 1967.

On 4 December 2017, Lufthansa became the first European airline to receive the Skytrax 5 star certification. As stated by Skytrax, a key factor in the positive rating was the announcement of a new Business Class cabin and seating that was expected to be introduced in 2020. While this makes Lufthansa the 10th airline to be holding this award, in reality the 5th star was given to a product that was supposed to be introduced two years after the evaluation. In celebration, Lufthansa painted an Airbus A320 and a Boeing 747-8 in the "5 Starhansa" livery.

In March 2018, Lufthansa and other airlines like British Airways and American Airlines accepted a request from Beijing to list Taiwan as part of China.

In March 2019 Lufthansa ordered 20 Boeing 787-9 and an additional 20 Airbus A350-900 for its own and the group's fleet replacement and expansion. Also, the airline announced it would sell six A380 aircraft back to Airbus, beginning in 2022.

2020s: COVID-19 pandemic and recovery

On 19 March 2020 Lufthansa cancelled 95 percent of all flights due to a travel ban because of the COVID-19 pandemic. Consequently, the airline incurred losses of 1 million euros per hour by April 2020. While Lufthansa reduced its costs throughout 2020, continuing health risks and travel restrictions still caused hourly losses of approximately 500,000 euros on average at the beginning of 2021.

On 14 May, Lufthansa Group announced that it planned to operate 1,800 weekly flights by the end of June. The company's recovery plans involved high-density cargo to replace paying customers. All Lufthansa Group required all passengers to wear a mask while aboard.

On 25 June, Deutsche Lufthansa AG shareholders accepted a bailout, consisting of capital measures and the participation of the Economic Stabilisation Fund (WSF) of the Federal Ministry for Economic Affairs and Energy. The measures, which passed after initial opposition by principal shareholder Heinz Hermann Thiele, gave the government a 20% stake in the airline.

In January 2021, Lufthansa CEO Spohr announced that the entire currently stored Airbus A340-600 fleet will be retired with immediate effect and not return to service anymore. This decision was later overturned with several A340-600 aircraft returning to service in 2021 after several months in storage. In June 2021, Lufthansa said it wants to repay state aid it received during the pandemic before Germany's federal election in September 2021 if possible. Also in June 2021, Lufthansa said it would change its communications to adopt a more gender-neutral and inclusive language. It will remove greetings such as " Ladies and Gentlemen".

In January 2022 Lufthansa admitted it had operated over 18,000 empty flights to keep airport slots during the pandemic.

In March 2022, Lufthansa originally confirmed that its entire Airbus A380 fleet would be retired, having been in storage since early 2020. This decision was reversed in June 2022, with plans to now return up to five aircraft from storage by 2023 to be based at Munich Airport. There is also an option to return all remaining eight A380 back to service by 2024, as six of formerly 14 have already been sold.

In May 2022, Skytrax demoted Lufthansa from its aforementioned 5 star rating which it held since 2017 as the first European carrier to do so, to an overall 4 star rating.

Corporate affairs

Ownership

Lufthansa was a state-owned enterprise until 1994. Deutsche Lufthansa AG shares have been publicly traded on all German stock exchanges since 1966. In addition to floor trading, it is also traded electronically using the Xetra system. It is a DAX index share and is listed in the Frankfurt Stock Exchange's Prime Standard. At the end of 2019, the shareholders’ register showed that German investors held 67.3% of the shares (previous year: 72.1%). The second-largest group, with 10.4%, was shareholders from Luxembourg. Investors from the US accounted for 8.1%, followed by Ireland and the United Kingdom, each with 3.6%. This ensures compliance with the provisions of the German Aviation Compliance Documentation Act (LuftNaSiG). As of the reporting date, 58% of the shares were held by institutional investors (previous year: 53%), and 42% were held by private individuals (previous year: 47%). Lansdowne Partners International Ltd. and BlackRock, Inc. were the largest shareholders in the Lufthansa Group at year-end, with 4.9% and 3.1% respectively. All the transactions requiring disclosure and published during the financial year 2019, as well as the quarterly updates on the shareholder structure, are available online. During the 2020 COVID crisis Heinz Hermann Thiele increased his stake to more than 12%; he died a few months later. The free float for Lufthansa shares was 67% in 2020, as per the definition of the Deutsche Börse.

German government bail-out

The German government offered a €9 billion bailout to support the airline through COVID-19 induced economic issues. With this bailout, the government's stake in the airline increased to 20%, and also grant it board seats, while diluting existing shareholder stakes. The shareholders of the company approved the bailout on Thursday, June 26, offering the airline a fresh lease of life.

Business trends

Key business and operating results of the Lufthansa Group for recent years are shown below (as at year ending 31 December):

Headquarters

Lufthansa's corporate headquarters are in Cologne. In 1971, Lawrence Fellows of ''The New York Times'' described the then-new headquarters building that Lufthansa occupied in Cologne as "gleaming". In 1986, Left-wing terrorists bombed the building. No one was injured. In 2006, builders laid the first stone of the new Lufthansa headquarters in Deutz, Cologne. By the end of 2007, Lufthansa planned to move 800 employees, including the company's finance department, to the new building. However, in early 2013 Lufthansa revealed plans to relocate its head office from Cologne to Frankfurt by 2017.

Several Lufthansa departments are not at the headquarters; instead they are in the Lufthansa Aviation Center at Frankfurt Airport. These departments include Corporate Communications and Investor Relations.

Airline subsidiaries

In addition to its main passenger operation, Lufthansa has several airline subsidiaries, including:

Wholly owned by Lufthansa

* Lufthansa German Airlines
** Lufthansa Regional – regional feeder entity
*** Lufthansa CityLine – German regional airline headquartered in Munich and part of Lufthansa Regional
*** Air Dolomiti