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ricport
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Thu May 17, 2018 12:30 pm

LOWS wrote:
MIflyer12 wrote:
TheLion wrote:
When will this era of accountant-driven capitalism evolve into something more enlightened?


What would that be? Why should anyone (or any holding company) continue to invest in a business that doesn't cover its cost of capital?


Because Spohr and Scott Kirby (among innumerable other examples) are forgetting the old adage that sometimes you have to spend money to make money.

Or maybe they're just looking for a reason to kill OS and replace it with Eurowings. :shock: After everything they've put OS and its staff through since buying it, that'd be particularly cruel.

Maybe Jeff Smisek could take over as OS CEO when Spohr gets rid of the latest one!


Ding, ding, ding! We have a winner. Spohr is clearly a Cum Laude graduate of the Carl Icahn School of Airline Mismanagement.
 
FatCat
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Thu May 17, 2018 12:31 pm

You are talking about politics.
I am talking about money!
You really think that every Austrian will stop flying anywhere because there is no carrier with "Austrian" written on it?
If you read the first post there is written

Lufthansa subsidiary Austrian Airlines


so what makes Austrian Airlines different from Lufthansa?
It is a subsidiary - it is owned by LHGroup, or some shares, or most - don't know the assets. So what's the point?
If a business is not profitable enough, why keeping it alive?
Pan Am went bankrupt, TWA was bought, USAir also, those were bigger carriers than Austrian.
Austrian Airlines's personell will work for Lufthansa - it is already so, what's the point?
EU Government may object that LHG has a predominancy on the market, and may take Antitrust actions - but will?
Do a Briton stop flying if British Airways stops flying? Or will he jump on another plane, even if it is not British?
Aeroplane flies high
Turns left, looks right
 
c933103
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Thu May 17, 2018 12:32 pm

How can an airlines generate profit with outdated equipment? Even if you have best efficiency in operation and lowest staff cost and can command a sales premium for god know whatever reason, it's still difficult if even possible to profit from flying something ancient instead of modern aircraft in scheduled services
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1989worstyear
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Thu May 17, 2018 12:58 pm

c933103 wrote:
How can an airlines generate profit with outdated equipment? Even if you have best efficiency in operation and lowest staff cost and can command a sales premium for god know whatever reason, it's still difficult if even possible to profit from flying something ancient instead of modern aircraft in scheduled services


Well, if that was the case all these carriers wouldn't have jumped on the A320 ESG for all of their 25-30 year old beat up frames.

Granted, the A320-200 is special as it has remained nearly unchanged since Nov. '88 and is still the most advanced NB available.
Stuck at age 15 thanks to the certification date of the A320-200 and my parents' decision to postpone having a kid by 3 years. At least there's Dignitas...
 
aw70
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Thu May 17, 2018 1:21 pm

Waterbomber wrote:
OS has been in LH s hands for a while.
Give them the budget and they'll get equipment and products sorted.
So when you fly a crappy OS B777, you are flying a crappy Lufthansa group product. The OS managers are just LH puppets. If you look at how the SN CEO was kicked out and replaced by a German, you get the drift.


Given that most higher OS managers prior to the take-over were political appointees with a rather dismal record of running an airline, I'd much rather have cost-cutting LH puppets trying to balance the books, than going on with the old Alitalia- or Air India-style mess.

I have friends who are pilots with OS (private pilot myself, they are in the same flying club). According to their stories the corporate culture at OS was already absolutely dreadful long before the LH takeover. Employees had to check their pay slips every month, lest some "honest mistake" of accounting once again sent them less money than they were owed. Management was openly hostile towards employees, and feelings on the part of the employees were understandably reciprocal.

All this did not really get better after the LH takeover: obviously, LH management seems to have loathed the corrupt and inefficient local management structure which they mostly had to replace. Looking down on those "Balkan Austrians" was allegedly much the done thing amongst the new German management which was brought in instead. But with them, these management newcomers also brought the toxic super-efficient "screw the employees for the sake of shareholder value" attitude of the Brave New Spohr World. Not an unequivocally good trade, it would seem. OS didn't go bankrupt, but it might get fed to the wolves at some point anyway.

Generally, it does not seem to be a fun time to be in any large company these days. And LH seems to be a rather harsh environment even by these standards. OS is a mere wart on their backside: either they get their act together, or they disappear.
 
PanHAM
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Thu May 17, 2018 1:30 pm

skipness1E wrote:
[quote="PanHAM} and it is European, not German only.

It's German dominated, a recurring theme in modern Europe. A tin ear does not make for a medium term strategy.[/quote]

You wouldn't believe how many Managers in LH pver the years were Austrian nationals. Shareholders can be foreign nationals up to 49,9%
The CFO is Swedish, the workforce is international in the true sense of the word. the market is the single EZ market and the Group itself is the number one aviation Group in the world.

Sure, at the end of the day LH is a German Company and a market keader in it's field. You can earn such a Status through hard work and effficiency. That could not be achieved with a "Germany First" attitude. Whoever is on such a trip will fail.
Was Erlauben Erdogan!!!
 
ei146
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Thu May 17, 2018 1:39 pm

skipness1E wrote:
It's German dominated, a recurring theme in modern Europe. A tin ear does not make for a medium term strategy.


Belgium: 11.3 Million inhabitants according to Wikipedia
Switzerland: 8.5
Austria: 8.8
all three combined: 28,6
Germany: 82.5

Like every company LH group as limitted ressources.
-Putting some serious effort in the German market is certainly a mistake. All available ressources shall go to Swiss, Brussels and Austrian. See how much the countries around have to contribute, this is just needed.
-Doing something on the LCC side is definitly wrong. We all see how the LCCs have difficulties to penetrate the market. The few flights they have are completly empty. and they don't make money.
-LH keeps failing to develop a third hub besides FRA and MUC in a 80 Millions country they dominate. So the logical consequence is to develop and keep three similiar hubs in the countries around.
-Trying to please as many paying customers as possible with as low as possible effort for the LH group is of course so wrong, because the group would actually make money.

(This might contain some sarcasm)
 
VS11
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Thu May 17, 2018 2:06 pm

Looks like the obvious answer has been overlooked - simply not every major European capital can be a profitable long haul hub. There simply isn’t that much demand to support hubs that are so close to one another. This is a matter of geography, not German over Austrian. Vienna, Zurich, Milan, Munich - they are all too close to one another.
 
senatorflyer
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Thu May 17, 2018 2:11 pm

TheLion wrote:
Spohr comes across as yet another hapless corporate neoliberal in an era where that awful ideology is dying.

Starving OS of more modern, fuel-efficient aircraft at a time of rising fuel prices, while expecting them to improve returns (ie savage their loyal staff’s benefits, T&Cs et al some more) is like knocking a hole in your boat as it enters choppy waters.

When will this era of accountant-driven capitalism evolve into something more enlightened? Sure profitability is necessary, but as the sole end goal it becomes toxic, as we’re finding out with the decline of British Airways.



Not sure what decline you are talking about. BA receives pretty much every month a new plane, invests money in onboard catering on LH, new business class on board amenities, renovates lounges, introduces new first class facilities so they do spend money.

They also earn money and as we have seen they perform really well. Now I’ll tell you this, at some point in future, LH Group and AFK will revamp the SH offerings too. BOB will come sooner or later to both airline groups when they see BA getting away with it. Swiss is already working on it.
 
mutu
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Thu May 17, 2018 2:17 pm

Andy33 wrote:
Arion640 wrote:
SQ789 wrote:
Do all other bigger airlines already has modern Long Haul fleets nowdays? Or OS is the only one that still operates older Long Haul fleet?


The BA 747s hold some age.


They do. The oldest is 28 (but unlikely to last past this year) and the newest is 19. However unlike LH, IAG is allowing its subsidiary BA to obtain brand new planes as replacements.


Indeed, although given they typically complete less than 2 cycles a day (allowing for maintenance down time etc) they are in aviation terms not nearing their end of life anytime soon. And with zero ownership costs, very profitable - so long as oil stays below $95 (IIRC).

But they remain because BA hesitated in committing to new types (having a policy not to be first to fly) and now find themselves slaves to production lists/delivery slots for the new frames they could afford to pay for today.
 
senatorflyer
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Thu May 17, 2018 2:24 pm

Not really, they have even pushed pack on some of the 787 and A350 deliveries. Lufthansa’s 747 aren’t that young either though.
 
na
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Thu May 17, 2018 2:42 pm

SQ789 wrote:
Do all other bigger airlines already has modern Long Haul fleets nowdays? Or OS is the only one that still operates older Long Haul fleet?

Much of UAs 772/77E subfleet is old, as is the one of BA.
 
na
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Thu May 17, 2018 2:48 pm

Begues wrote:
Bacause Munich is in Germany, not in Austria, it serves the intrest of Germans, the people of Austria will never put up with having to go through a German airport just to be able to do business abroad. They will launch a new airline like there is no tomorrow.

Munich is closer to Salzburg and Innsbruck areas than Vienna is.
 
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seahawk
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Thu May 17, 2018 3:03 pm

LH group will fall anyway, as it only serves German interests.
 
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zkojq
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Thu May 17, 2018 3:12 pm

I think people are reading too much into this; I don't see much of a change to the status quo. Swiss and Lufthansa are earning good money and thus are receiving brand new narrowbodies and widebodies from Airbus/Boeing and Bombardier. Brussels and Austrian have lesser profits, so their fleet is being renewed with second hand aircraft, 777-200ERs for Austrian and A330-300s for Brussels. Similarly, Eurowings widebody operations are unproven (presumably unprofitable, but who knows, maybe it is?) so gets old A330-200s and a fourth hand 767-300ER.

Lufthansa has the freedom to shift aircraft around the group as needed. I'm sure that some plans will be being made to replace OS's old 767s.


Arion640 wrote:
SQ789 wrote:
Do all other bigger airlines already has modern Long Haul fleets nowdays? Or OS is the only one that still operates older Long Haul fleet?


The BA 747s hold some age.

Qantas' 747-400nonER fleet says hi. :)


sergegva wrote:
kimimm19 wrote:
More disgusting news from Germany... They would try to do the same to Swiss if it wasn't their best performing airline in the group year on year now...

It's simple, to gain returns you must invest... Especially with these far more economical planes that are now available.


Even Swiss is not spoiled. They get only old generations aircraft. Of course, B777W is still a good and efficient aircraft today. But what in ten years? LX will struggle if fuel prices are high and it had to compete against competitors with a fleet that is 100% next gen (787 & 350).


kimimm19 wrote:
That's a different story of idiocracy whereby LH has put Swiss behind the 8-ball now for nothing but lower upfront costs. Unless they get the a350 within the next ten years, their longhaul fleet will be a mess...

Nothing says that Swiss has to keep those 777s. In ten years time they could buy some A350-1000s and the Lufthansa Group could shift the 77Ws to Austrian/Brussels/Eurowings.


devron wrote:
“Ten percent of our [Lufthansa Group] aircraft is based in Austria, but only 4% of the group’s profit is generated there.


Playing with statistics. Give OS A380s and they can fly with 4 % of the fleet.


For sure. Would be interesting to know the exact situation OS is in, profitability wise.

sabenapilot wrote:
Just comparing a REAL European aviation group like IAG with a pseudo-European group like LHG.

At the first Group, business decisions are made based solely on merits, not origin, as evidenced also by the fact that re CEO of British Airways (of all accounts!) is a Spaniard;


So why is said Spaniard running BA into the ground?
First to fly the 787-9
 
senatorflyer
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Thu May 17, 2018 6:20 pm

sabenapilot wrote:
kimimm19 wrote:
More disgusting news from Germany... They would try to do the same to Swiss if it wasn't their best performing airline n the group year on year now...

It's simple, to gain returns you must invest... Especially with these far more economical planes that are now available.


Indeed.
An airline must be profitable, but it must be allowed to, meaning you give them both the tools to fly and the freedom to fly where they want.

The LH Group however has a clear preference towards Lufthansa proper, as also evidenced by it's name, BTW: why not have a more neutral name like IAG for the holding company???

Because if this 'Germany First' approach, it's very difficult for any other airline of the group -except LX at ZRH, which is a real jackpot- to run a sufficiently large global network to live off, as doing so is quickly seen as an unloyal attack on Lufthansa itself, also having such network.

The reality is Lufthansa is already suffering from external competition more than it likes, so it doesn't want to see more internal competition: all that thus remains for the others are niche markets where LH is either maxed out on bilaterals (e.g. india or japan), or where it is incapable of operating (west and central Africa), combined with leisure routes where Lufthansa's cost base is completely unsuitable for: try making a profitable network with such a cluster, however!

Especially now that Spohr got the brilliant idea to create a pan-European but very German company, Eurowings, to target those leisure routes, which obviously once more gets the unambiguous preference over any other non-German company in the group, and you're stuck in the situation where both OS and SN are in: with a much lower operating cost than that of it's internal competitors LH and LX, yet only allowed to operate on a too small skeleton network, officially because they arent making a profit big enough to grow further.

If the LH Group wants to maximize it's profits and let all of it's companies flourish, rather than just the German ones, it should take away a significant number of flights with a high connecting ratio of passengers away from its high cost airlines LH and LX and put them at SN and OS: a Scandinavian for instance really doesn't care whether he passes through FRA/ZRH , or BRU/VIE to go to say south America, so a whole lot of intercontinental flights could just as well be operated out of other hubs but FRA or ZRH too, and most likely at a lower cost even!!!
It's just German centrism which prevents this, evidenced by the appointment of Germans as CEO at each and every airline of the Group, as if nobody else in Europe is able to run an airline profitable.


You are missing an important detail. BA and Iberia formed IAG through a merger. Lufthansa on the otherhand bought (acquisition) LX,OS and SN. So it’s natural that the Lufthansa management is in charge over its subsidiaries.
 
Waterbomber
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Fri May 18, 2018 3:39 am

aw70 wrote:
Waterbomber wrote:
OS has been in LH s hands for a while.
Give them the budget and they'll get equipment and products sorted.
So when you fly a crappy OS B777, you are flying a crappy Lufthansa group product. The OS managers are just LH puppets. If you look at how the SN CEO was kicked out and replaced by a German, you get the drift.


Given that most higher OS managers prior to the take-over were political appointees with a rather dismal record of running an airline, I'd much rather have cost-cutting LH puppets trying to balance the books, than going on with the old Alitalia- or Air India-style mess.

I have friends who are pilots with OS (private pilot myself, they are in the same flying club). According to their stories the corporate culture at OS was already absolutely dreadful long before the LH takeover. Employees had to check their pay slips every month, lest some "honest mistake" of accounting once again sent them less money than they were owed. Management was openly hostile towards employees, and feelings on the part of the employees were understandably reciprocal.

All this did not really get better after the LH takeover: obviously, LH management seems to have loathed the corrupt and inefficient local management structure which they mostly had to replace. Looking down on those "Balkan Austrians" was allegedly much the done thing amongst the new German management which was brought in instead. But with them, these management newcomers also brought the toxic super-efficient "screw the employees for the sake of shareholder value" attitude of the Brave New Spohr World. Not an unequivocally good trade, it would seem. OS didn't go bankrupt, but it might get fed to the wolves at some point anyway.

Generally, it does not seem to be a fun time to be in any large company these days. And LH seems to be a rather harsh environment even by these standards. OS is a mere wart on their backside: either they get their act together, or they disappear.


You are totally right.
One has to wonder where all of this is headed for.
 
mdavies06
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Fri May 18, 2018 4:46 am

To me it makes sense to hold off fleet renewal. From personal experience for the past few years quite often OS comes up as one of the cheapest choices for both short haul when travelling around Europe (say from London to Eastern Europe) or in long haul. I am not sure what their corporate client base is like and whether they have the scale to leverage that. Separately, many legacy carriers today actually do a very good job in maintaining aging fleet. Take DL for example with their 767 fleet. They look brand new from the passenger perspective.
 
AIRT0M
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Fri May 18, 2018 5:13 am

sabenapilot wrote:
FatCat wrote:
We're in Europe and business are transnational, it makes absolutely no sense what you've written above. Government cannot "act in the interest of Austria" by starting up an airline because there are many EU regulations that inhibit this way of financing business,


Let me tell you a real story:
Last year, Spohr was openly saying wherever he came that SN would be folded into EW at the end of 2018 (when the grace period was over), something which really didn't go down well in Belgium;
The Belgian government explicitly had to make it clear to Mr. Spohr that the very generous and lucrative traffic rights held by SN under the Belgian bilateral agreements with numerous African countries are really not theirs and thus not LH's, but forever Belgian and that as such the government can at any time by a simple Royal Decree decide to award (part of) them to another designated carrier...
Such could become in the general interest of Belgium even, should it become clear that the sole reason as to why those traffic rights are currently awarded to a single privately and foreign owned carrier (i.e. hub and network building at BRU) is no longer the case... and a couple of months later, a long haul airline 'Air Belgium' was founded with -amongst others- money from Belgian regional government entities and which is currently aimed at serving just China, yet they have said they'd be interested in taking over some traffic rights to Africa too, if they'd get the chance.
Next thing you knew and Mr. Spohr asked for an audience with the King to explain he was misunderstood and since ...


Oh you do hate the germans, don't you?
Funny how nothing came true what you predicted all the time (killing SN for EW). In fact, quite the opposite is the case, as Spohr always has been saying.
 
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JakubH
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Fri May 18, 2018 6:31 am

mdavies06 wrote:
To me it makes sense to hold off fleet renewal. From personal experience for the past few years quite often OS comes up as one of the cheapest choices for both short haul when travelling around Europe (say from London to Eastern Europe) or in long haul. I am not sure what their corporate client base is like and whether they have the scale to leverage that. Separately, many legacy carriers today actually do a very good job in maintaining aging fleet. Take DL for example with their 767 fleet. They look brand new from the passenger perspective.

Interesting. My experience has been OS is often more expensive than LH on Europe - North America routes (to/from Prague). I suppose some of that comes with fare hunting among more potential connections via Germany than through Vienna.

This move could further bolster LOT which is hoping to leverage its north-eastern location with possibly a new airport in Warsaw (another issue not to get too deeply into here...).

At any rate, with the likes of 787, I would have expected more long-haul flights from smaller airports, not fewer. And Vienna has a long tradition of these with significant business activity to support them. LH's approach vis-a-vis OS does seem myopic given the improving finances despite older equipment - but hey, we may be reading too much into this.
Humility is not thinking less of yourself, it's thinking of yourself less.
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AroundTheGlobe
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Fri May 18, 2018 7:06 am

What would be / is wrong with a second hand replacement? How satisfied is OS with their Embraer fleet?
A318, A319, A320, A321, A346, A388, B462, B733, B734, B735, B744, B74D, B74M, B748, B753, B763, B772, B77E, B773, B77W, B788, B789, CRJ2, CRJ7, CRJ9, CRJX, DH8A, DH8C, DH8D, E190, E195, F70, F100, MD11, RJ85, RJ1H
 
stylo777
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Fri May 18, 2018 7:41 am

I don't get it! The same folk taking the WDL Aviation 30 year-old BAe146 operated Easyjet flight or former-AB-now-who-knows Laudamotion by Ryanair or the other way around flight. is complaining big time about the allocation of resources within a global aviation holding.

If the profit margin is so slim, of course Mr Spohrs has the responsibility to look for alternatives. But he surely doesn't take the decisions on a stupid German first agenda and Austrians/Belgian third (because Swiss is 2nd...). Simply stupid of whoever thinks through that topic this way.
 
gokmengs
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Fri May 18, 2018 9:22 am

I clearly understand LH Groups decision to increase or decrease their investment based on performance. We should also ask where would say OS be without LH. Lets see where these airlines will be after 3-4 years when new IST is fully operational and TK is flying multiple frequencies to all first and second and third tier EU cities, longhaul markets will be highly squeezed by TK and LH is preparing for that I believe.
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aviationaware
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Fri May 18, 2018 9:35 am

LOWS wrote:
Maybe Jeff Smisek could take over as OS CEO when Spohr gets rid of the latest one!


They just replaced the last CEO with the prior CCO of Cargo, Alexis von Hoensbroech.
 
Jetty
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Re: LH Spohr: OS to postpone long-haul fleet renewal

Fri May 18, 2018 11:10 am

sabenapilot wrote:
Because if this 'Germany First' approach, it's very difficult for any other airline of the group -except LX at ZRH, which is a real jackpot- to run a sufficiently large global network to live off, as doing so is quickly seen as an unloyal attack on Lufthansa itself, also having such network.

The reality is Lufthansa is already suffering from external competition more than it likes, so it doesn't want to see more internal competition: all that thus remains for the others are niche markets where LH is either maxed out on bilaterals (e.g. india or japan), or where it is incapable of operating (west and central Africa), combined with leisure routes where Lufthansa's cost base is completely unsuitable for: try making a profitable network with such a cluster, however!

Especially now that Spohr got the brilliant idea to create a pan-European but very German company, Eurowings, to target those leisure routes, which obviously once more gets the unambiguous preference over any other non-German company in the group, and you're stuck in the situation where both OS and SN are in: with a much lower operating cost than that of it's internal competitors LH and LX, yet only allowed to operate on a too small skeleton network, officially because they arent making a profit big enough to grow further.

That's difficult anyway, regardless of Lufthansa. With AMS, CDG, FRA and MUC northwest/central Europe is well covered with mega-hubs that can sustain such a large global network. That VIE and BRU aren't (anymore) isn't to blame on Lufthansa, but bad management long before that.

If the LH Group wants to maximize it's profits and let all of it's companies flourish, rather than just the German ones, it should take away a significant number of flights with a high connecting ratio of passengers away from its high cost airlines LH and LX and put them at SN and OS: a Scandinavian for instance really doesn't care whether he passes through FRA/ZRH , or BRU/VIE to go to say south America, so a whole lot of intercontinental flights could just as well be operated out of other hubs but FRA or ZRH too, and most likely at a lower cost even!!!
It's just German centrism which prevents this, evidenced by the appointment of Germans as CEO at each and every airline of the Group, as if nobody else in Europe is able to run an airline profitable.

It isn't necessarily German centrism that prevents that, but economies of scale. FRA and MUC have many more European feeder flights, and to offer most convenient connections to most of those passangers it only makes sense to concentrate the global flights at those places. There simply aren't enough passengers in Europe to replicate an efficient global hub in VIE and BRU.

sabenapilot wrote:
The Belgian government explicitly had to make it clear to Mr. Spohr that the very generous and lucrative traffic rights held by SN under the Belgian bilateral agreements with numerous African countries are really not theirs and thus not LH's, but forever Belgian and that as such the government can at any time by a simple Royal Decree decide to award (part of) them to another designated carrier... Such could become in the general interest of Belgium even, should it become clear that the sole reason as to why those traffic rights are currently awarded to a single privately and foreign owned carrier (i.e. hub and network building at BRU) is no longer the case... and a couple of months later, a long haul airline 'Air Belgium' was founded with -amongst others- money from Belgian regional government entities and which is currently aimed at serving just China, yet they have said they'd be interested in taking over some traffic rights to Africa too, if they'd get the chance.
Next thing you knew and Mr. Spohr asked for an audience with the King to explain he was misunderstood and since them the talk from Lufthansa is about the Eurowings GROUP and a 2 brand solution...
So yes, governments still have quite some leverage and they should use it to make sure that vital air links are not just taken away by foreign take-overs, because those links are part of the invisible infrastructure, important to support the nation's economy.

There are many reasons withholding more European airlines from establishing an extended Africa network and limited traffic rights is not one of them. Any African country with it's limited connectivity and lack of home-carriers offering long-haul flights would be crazy to refuse carriers offering global connections and I can't remember one instance where this did happen (if you know them, please tell). Thus I doubt any such threat would have made much impression. Besides that Belgium on it's own wasn't able to make Sabena or Brussels Airlines viable, and there's no reason why this would be any different with another new airline.

sabenapilot wrote:
Indeed, but he wasn't German and didn't want to help the Germans at dismantling SN.
But he did turn around a loss making legacy carrier into a profitable one, all while growing the number of passengers by almost 50% right at the doorstep of Ryanair's biggest continental base CRL! It frustrated MOL to the point he based a bunch of 737s at BRU too, some of which he pulled out again because he couldn't win the fight. Oh, and SN kept growing and remained profitable even throughout 2016, when they were locked out of their own hub for a fortnight due to terror attacks on BRU! Take a bow, Eurowings! ROTFL.
But no, he had to be replaced by some German puppet who's now facing a 2day strike within just weeks of her appointment, all while the company is quickly turning into the usual operational mess, typical whenever Germans take over something and things don't go exactly as planned...

There's a reason why Brussels Airlines needed a buyer, that's because they couldn't survive on their own and were consistently losing money, just as Sabena. It's a bit easy to blame the upcoming transition of SN into EW on LH when there wouldn't be a SN without LH anyway.
 
Jetter330
Posts: 39
Joined: Fri Nov 03, 2017 6:04 pm

Re: LH Spohr: OS to postpone long-haul fleet renewal

Fri May 18, 2018 11:42 am

I just wonder how SN would have looked like right now if they would have closed the deal with BA instead of LH.

When they agreed with LH to be taken over xx years ago, the CEO at that time, Mayrhuber i believe, his plans with SN were totally different and better for SN then Spohr’s plans. It was to make SN grow in Africa and become the Africa specialist of the Group. Now what’s left of those plans? No new African destinations are in the pipeline, Spohr is just using SN to make his beloved EW grow. Sad, really
 
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aemoreira1981
Posts: 2988
Joined: Mon Jan 09, 2017 12:17 am

Re: LH Spohr: OS to postpone long-haul fleet renewal

Fri May 18, 2018 12:02 pm

I have to wonder how much longer OS can survive as Austrian, as opposed to being just another Eurowings operator, which might be the idea...as newer planes go to LH, older planes, especially A330-300s, get sent to OS from LH to replace the old early-1990s 767s.
 
sabenapilot
Posts: 3093
Joined: Sat Feb 26, 2000 6:18 pm

Re: LH Spohr: OS to postpone long-haul fleet renewal

Fri May 18, 2018 1:50 pm

Jetty wrote:
If the LH Group wants to maximize it's profits and let all of it's companies flourish, rather than just the German ones, it should take away a significant number of flights with a high connecting ratio of passengers away from its high cost airlines LH and LX and put them at SN and OS.

It isn't necessarily German centrism that prevents that, but economies of scale. FRA and MUC have many more European feeder flights, and to offer most convenient connections to most of those passangers it only makes sense to concentrate the global flights at those places. There simply aren't enough passengers in Europe to replicate an efficient global hub in VIE and BRU.


I'm not talking about just replicating FRA or MUC, I'm talking about using the much more favorable cost bases of the home carriers at BRU and VIE to shift a significant part of the LH network to, i.e. those flights which carry a very high number of European connecting passengers rather than O&D load: those flights could be routed through pretty much any good alternative to FRA or MUC too, you know?

Never thought why it is that within an airline group comprising of 5 intercontinental airlines operating from 6 hubs, hardly any intercontinental routes have been transferred between the different airlines so far (except the shift from LH to EW) and swaps between hubs are often limited to intra-German swaps too????

Is this because accidentally and by some sort of magic, each and every long haul route already operated today was already at its optimum point of departure, or because LH just doesn't want to go down this radical path of optimization because if it does so and starts looking at optimizing the group's profitability by letting flights depart depart from the place where the difference between RASM and CASM will be biggest, it will find out it's largely a one way path of downsizing LH to the benefit of its past acquisitions like OS and SN????

What do you think? The first means you hardly need the current group's network management (so get rid of it), the second means group's network management is protective towards a certain airline: which one is it?

Jetty wrote:
[There's a reason why Brussels Airlines needed a buyer, that's because they couldn't survive on their own and were consistently losing money, just as Sabena. It's a bit easy to blame the upcoming transition of SN into EW on LH when there wouldn't be a SN without LH anyway.


You see, that's exactly the problem: the idea that any airline which was bought by LH is a total failure and should thus be grateful for still being allowed to be around, without further growth expectations.
Once you buy a certain airline, you have to see them as in integral part of yourself, not just as being owned or controlled by you. The latter really is the wrong attitude if you want to run a group of successful airlines, rather than an equity alliance which should just benefit the owner itself: that other 5 star airline trying this approach (EY) didn't have much pleasure from it, did they?

Besides, allow me to say you have your stereotypic setting is a bit wrong in relation to SN: the story of their acquisition is quite a different from OS, as you could already read here above: a profitable SN looked for a global partner in Europe to grow further, but a merger with either BA or LH was simply impossible due to its small size, hence a purchase structure was agreed with LH with a nice gentlemen's agreement attached too it, but nevertheless, it doesn't matter in the context of this discussion.

Once you adopt a child; it either becomes your own blood and flesh and you don't discriminate it vs. your other own children, or you don't adopt it at all: if Spohr wants OS to be more profitable like he constantly says, the easiest way is see it grow quickly and profitably and thus to commit some resources to it: give them a few (new) planes currently deployed at Lufthansa and a few extra routes of which he knows they will be immediately successful because he simply transfers them from his own home airline, Lufthansa. OS could just as well do the job and at a lower cost even, so the whole idea would even be good for the wider group's profit. Exactly what's stopping him from being radically focused on reshaping passenger flows within the group to maximize profit, other than a personal desire to keep Lufthansa intact?
 
Jetty
Posts: 1044
Joined: Wed Nov 11, 2015 12:27 pm

Re: LH Spohr: OS to postpone long-haul fleet renewal

Fri May 18, 2018 3:08 pm

sabenapilot wrote:
Jetty wrote:
If the LH Group wants to maximize it's profits and let all of it's companies flourish, rather than just the German ones, it should take away a significant number of flights with a high connecting ratio of passengers away from its high cost airlines LH and LX and put them at SN and OS.

It isn't necessarily German centrism that prevents that, but economies of scale. FRA and MUC have many more European feeder flights, and to offer most convenient connections to most of those passangers it only makes sense to concentrate the global flights at those places. There simply aren't enough passengers in Europe to replicate an efficient global hub in VIE and BRU.


I'm not talking about just replicating FRA or MUC, I'm talking about using the much more favorable cost bases of the home carriers at BRU and VIE to shift a significant part of the LH network to, i.e. those flights which carry a very high number of European connecting passengers rather than O&D load: those flights could be routed through pretty much any good alternative to FRA or MUC too, you know?

No I don't. If LH can fill a plane from say Aalborg to FRA with passengers connecting to all over the world you can't move that flight to BRU or VIE just because many passengers are connecting as they lack the connectivity to fill that flight. Moreover if you move feeder flights away from FRA it might be unable to fill some flights to intercontinental destinations that need feeder flights. By moving a significant amount of feeder flights away from FRA you undermine the whole hub model.

Besides, allow me to say you have your stereotypic setting is a bit wrong in relation to SN: the story of their acquisition is quite a different from OS, as you could already read here above: a profitable SN looked for a global partner in Europe to grow further, but a merger with either BA or LH was simply impossible due to its small size, hence a purchase structure was agreed with LH with a nice gentlemen's agreement attached too it, but nevertheless, it doesn't matter in the context of this discussion.

SN has never made significant profits, and lost money during the years before LH bought it. There's a reason LH invested cash in SN when they bought it: SN badly needed it to survive.

Once you adopt a child; it either becomes your own blood and flesh and you don't discriminate it vs. your other own children, or you don't adopt it at all: if Spohr wants OS to be more profitable like he constantly says, the easiest way is see it grow quickly and profitably and thus to commit some resources to it: give them a few (new) planes currently deployed at Lufthansa and a few extra routes of which he knows they will be immediately successful because he simply transfers them from his own home airline, Lufthansa. OS could just as well do the job and at a lower cost even, so the whole idea would even be good for the wider group's profit. Exactly what's stopping him from being radically focused on reshaping passenger flows within the group to maximize profit, other than a personal desire to keep Lufthansa intact?

Discrimination doesn't apply to legal entities, if LH sees SN's current operation best fitting in EW that's their prerogative.

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