LSG central to Lufthansa growth plan: Spohr

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Catering is to play an important role in raising Lufthansa’s group revenues, the airline having made a strategy U-turn after previously trying to sell its LSG Sky Chefs arm.

Under former group chief executive Christoph Franz – who left Lufthansa in April for a post as chairman of Swiss pharmaceutical giant Roche – the carrier had been looking for investors to take at least a share in LSG. But that search was halted in the first half of 2013, as no buyer could be found.

Franz said at the time that LSG would be retained to pursue growth opportunities as a group unit. But he did not rule out a sale at a later point.

Now, LSG is to seen as central to expanding the group’s business – as is MRO division Lufthansa Technik – particularly in the growth regions Asia, Latin America and the Middle East, indicates new chief executive Carsten Spohr. The two service divisions provide a “natural hedge” for business opportunities in regions where Lufthansa cannot benefit from aviation growth in terms of airline operations, he says.

As, for example, Latin America’s airline growth is largely driven by intra-regional traffic with narrowbodies, Lufthansa Technik is building a base maintenance facility in Puerto Rico for operators of such aircraft in North and South America. The site is due to open in 2015.

Today, Lufthansa’s mainline operations generate around 70% of the group’s turnover, with the remainder coming from point-to-point airline traffic and service subsidiaries. But under the new strategy, the latter segment’s share is to grow to 40% of total turnover by 2020, says Spohr.

Lufthansa is planning to establish a new low-cost long-haul subsidiary and realign its regional branch Eurowings as a pan-European carrier to grow its point-to-point business in future. To aid that strategy, Lufthansa will establish a “second tier” for its “Miles & More” bonus scheme, which will be focused on the “less frequent” travellers using the point-to-point subsidiaries, the group says.

Separately, Lufthansa aims to triple its revenues from ancillary services by 2020, says Spohr.