Teckentrup turns around Thomas Cook

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By Colin Baker in Frankfurt

It is perhaps too early to be talking about who will be the next chief executive of Lufthansa. Wolfgang Mayrhuber has only been in the job since April 2002. However, if one was to draw up a shortlist of candidates, Ralf Teckentrup, Thomas Cook boardroom member in charge of the European leisure group’s airlines, would be on most people’s list

condorPrior to joining Thomas Cook in 2004, 47-year-old Teckentrup had spent his entire career at Lufthansa, which has a 50% stake in the group (German retail firm Karstadt holds the other 50%). His remit when he joined Thomas Cook was pretty clear. As Lufthansa was recovering from the post-9/11 downturn, Thomas Cook was dragging down profits. Condor, the leisure group’s German carrier, made an operating loss of €101 million ($100 million) on turnover of €1.1 billion in 2002-3.

In early 2004, shortly after he moved to Thomas Cook, Teckentrup spoke to the carrier’s employees in groups of around 100. “I told them, we were fighting for survival,” he says. “The question was not whether, but how to reduce costs drastically. If not, management would look for the cheapest way to close the airline down.”

Teckentrup combines a laidback, affable manner with an ability to make tough business decisions. This blend has undoubtedly helped him keep the unions onside, with labour agreeing to new working practices which have boosted productivity, while the fleet has been trimmed from 48 to 37 aircraft. Teckentrup is confident of a return to the black this year, and once the last €60 million of an €240 million revenue-boosting programme is in place next year, he believes that the carrier’s cost base will be in the same league as Air Berlin and easyJet.

Teckentrup started out at Lufthansa in the corporate organisation department in 1986, where he worked on restructuring and cost-cutting projects and was later made manager for corporate organisation – all good practice for his work at Condor. He also worked in sales and marketing, network planning and IT before his move to Condor in 2004

On the question of why Thomas Cook has not followed rival firm TUI in launching a standalone low-cost product, Teckentrup makes clear that given the perilous financial state of Thomas Cook, this was not an option. In any case, Lufthansa has chosen another path for its low-cost venture, with 49%-Lufthansa-owned regional Eurowings used to launch germanwings.

teckentrup

While he may not be keen in following TUI, Teckentrup is clearly a big fan of Air Berlin, which has developed a charter/seat-only hybrid model. Teckentrup says he sees Air Berlin as the “benchmark” for Condor. Air Berlin carries more than half its passengers on a seat-only basis, something that Teckentrup sees as a goal to aim for. Condor expects to carry 40% seat-only passengers next year, compared with 20% in 2004.

With this in mind, Teckentrup is scouting out for city pairs which can offer a high amount of seat-only traffic and bring greater balance in terms of seasonality.

Condor has come to the city-to-city market somewhat late in the day, but Teckentrup insists that there is still room for growth, pointing to the fact that low-cost market share in Germany is still some way off that seen in the UK. Some destinations, including Malaga, Jerez de la Frontera and Barcelona are already mainly seat-only.

A move to more city-break destinations could see the carrier come up against germanwings, which would be interesting given the Lufthansa connection of the two airlines. This could see the carrier come into direct competition with sister airline germanwings. “Condor is part of the Thomas Cook group, in which Lufthansa has a 50% stake. As such we take independent business decisions,” Teckentrup insists. “I wouldn’t fly Munich-Barcelona 10 minutes after germanwings. But I wouldn’t do it 10 minutes after anyone else either.”

One thing is for sure. Condor will be keeping its full service offering. Teckentrup points to US mid-market carrier JetBlue as something of a role model. “I don’t believe that positioning Condor as a low-cost carrier is the best option. Condor has to be a carrier with a very high product quality at very competitive prices.” says Teckentrup.

Despite the anticipated move into the black, the future direction of Condor and indeed the entire Thomas Cook group is somewhat unclear, despite the fact that after four years of losses, the leisure group as a whole is expected to make a profit this year. There has been frequent speculation in the press about the intentions of the two shareholders, and it is not surprising that the airline is promoting the fact it is on schedule to start making money for its owners this year.

The successful transformation of Condor has also put Teckentrup in the spotlight and, come the day when Lufthansa needs to choose its next chief executive, his name may well be in the frame.

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