Four out of six members of the Executive Board are leaving the Group almost simultaneously, and the Supervisory Board is also eliminating one Executive Board position entirely. Only the CEO Carsten Spohr and the former Chief Human Resources Officer Michael Niggemann will remain.
Lufthansa announced this Group Executive Board mega-restructuring on February 22 in the evening. From July 1, the Lufthansa Executive Board will have only five members instead of the previous six. The restructuring coincides with the departure of four members of the Executive Board. The terms of office of Harry Hohmeister, Executive Board member responsible for Global Markets and Network Management, and Detlef Kayser, Executive Board member responsible for Fleet and Technology, will both end at the end of June. In addition, Christina Foerster, Head of Brand Management and Sustainability, and CFO Remco Steenbergen will leave the company at the end of June “by mutual agreement”. Michael Niggemann, Board Member for Human Resources and Infrastructure, will then take over the finance department on an interim basis in addition to his current duties until a new appointment is made.
The scale of the changes is likely to raise eyebrows and possibly raise concerns about the risks that could arise from the changes, commented RBC analyst Ruairi Cullinane. Analyst Harry Gowers from the US bank JPMorgan wrote that most of the attention will be on the departure of CFO Steenbergen. Steenbergen had done a very good job by consolidating the balance sheet, restructuring the cost base and then leading Lufthansa out of the pandemic. The financial strategy is now becoming less clear.
“After successfully overcoming the corona crisis, the subsequent recovery of air traffic and the economic turnaround, the Lufthansa Group is entering the next phase of its corporate development with a realignment of the Executive Board,” the Lufthansa press release explained. Karl-Ludwig Kley, Chairman of the Supervisory Board, stated that the challenges facing the industry and the company were different to those of previous years, but that they remained enormous. “We want to tackle them with new momentum and a changed team that combines even more international experience and diverse perspectives.” Kley also expects a strong understanding of teamwork.
According to the Supervisory Board’s decision, Grazia Vittadini, currently Special Advisor to Rolls-Royce, will be appointed to the Executive Board as Head of Technology and IT with effect from July 1, 2024. Also with effect from July 1, 2024, Dieter Vranckx, currently CEO of the subsidiary Swiss International Air Lines, will be appointed to the Executive Board as “Global Markets and Commercial Management Hubs”. With his move to Frankfurt, Vranckx will take over Steenbergen’s mandate as Vice Chairman of the Board of Directors of Swiss Air. The Lufthansa Executive Board position “Group Finance” is to be newly filled.
UFO declares Lufthansa collective bargaining round a failure – cabin crew face strike
Shortly before the news of the Executive Board reshuffle, the flight attendants’ union UFO has declared collective bargaining with Lufthansa to have failed and is putting its members to the vote on strike action. The airline had not presented a sufficient offer for the approximately 18,000 cabin crew at a top-level meeting, UFO announced on February 22 in the evening. “We are not happy to take the path of escalation, but we have no alternative,” said UFO Chairman Joachim Vázquez Bürger. From next week, Lufthansa union members will be called upon to vote on strikes in a ballot by March 6. In UFO’s view, Lufthansa is also heading for another summer of chaos. “The planning is inadequate and the staff shortage is dramatic,” it said.
Lufthansa share price slips – risk of strike and Executive Board restructuring
The threat of a strike and the restructuring of the Executive Board weighed on Lufthansa shares on Friday, February 23. In XETRA trading, the airline’s share price fell by 1.63 percent to close at 7.38 euros. Lufthansa shares were thus among the biggest losers in the MDAX. In the meantime, the Lufthansa share price was at its lowest level since the beginning of November.
On the one hand, the airline has to prepare for further strikes in the wage dispute with the Ufo union and, on the other hand, there is uncertainty that almost the entire management will be replaced.
One trader emphasized in particular the departure of CFO Remco Steenbergen, which came as something of a surprise after a contract extension just over a year ago. According to JPMorgan analyst Harry Gowers, the news should not go down well. Steenbergen was highly regarded by investors, he emphasized. He had done a good job. The financial strategy is now becoming less clear, according to the expert.
Sources: Finanzen.net, dpa-AFX, Lufthansa