Lufthansa aims to net €100 million ($123 million) in savings over the next two years from its regional group as it undertakes a strategic review of its regional operations in light of increasing competition from low-cost carriers. As it implements this strategic review, the airline is unlikely to move nearer to its long-expected large regional jet order until at least the end of this year.

Werner Knorr, senior vice-president of the carrier's recently created Lufthansa Regional arm, which encompasses wholly owned subsidiaries CityLine and Air Dolomiti; 49%-owned Eurowings; and feeder partners Augsburg Airways and Contact Air, says the "project is ongoing" to determine fleet needs.

Speaking to Flight International at last week's European Regions Airline Association conference in Barcelona, Knorr said the explosion of low-cost carriers in the German market in the past year had left Lufthansa "struggling to keep regional routes alive". Knorr says he is tasked with "dramatic cost cutting". He adds: "We are looking to save €100 million in the next two years - 50% through cost reductions and 50% through revenue rises. This will enable us to sustain a regional fleet of 160 aircraft."

The airline is rationalising commercial arrangements with regional partners, moving them all on to aircraft, crew, maintenance and insurance charter agreements.

Knorr says that the fleet choice has been narrowed to Bombardier and Embraer regional jet types, with "more details in six months".

Lufthansa's need for a new fleet of large regional jets can be traced to an earlier order placed by CityLine for up to 120 Fairchild Dornier 728s (including options). This deal, which was cancelled when the programme collapsed in 2002, had called for deliveries to start last year. Since the termination of that order Lufthansa has broadened its requirement to cover all its regional partners and joined other Star Alliance partners to agree a joint specification that culminated in Air Canada ordering Bombardier CRJ700-705s and Embraer 190s in December.


Source: Flight International