Lufthansa to Carve Out Outpost in Move to Lower Check-in Costs

Deutsche Lufthansa (LHA) AG, Europe’s second-largest airline, plans to carve out eight regional offices in Germany in a move that may allow the carrier to reduce check-in and ticketing costs.

Lufthansa plans to change the legal form of operations in Berlin, Hamburg, Hanover, Bremen, Dusseldorf, Cologne, Nuremberg and Stuttgart, which together employ 1,500 people, and move them into its Lufthansa Commercial Holding, the umbrella for about 400 subsidiaries, spokesman Andreas Bartels said.

Lufthansa is transferring non-hub European traffic to its Germanwings low-cost subsidiary, a key part of a group-wide push to lift operating profit to 2.65 billion euros ($3.64 billion) by next year. The carrier had unsuccessfully sought to reduce costs at the outposts about two years ago under a plan dubbed “Move” that aimed to replace retiring employees with outsiders, a project it is no longer pursuing.

“This is a topic that has been discussed for a decade, and with the transfer of routes to Germanwings, it’s now back on top of the agenda,” said Christine Behle, an executive board member of Ver.di services union.

Behle, who is deputy chairman of Lufthansa’s supervisory board, said the union opposes the latest move because it is likely to result in “massive reductions” in pay and may still result in the local offices being closed in the medium term.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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