A five-day strike is a major blow in Lufthansa’s recent history. But that’s not all: The company is also facing its most difficult economic situation since the coronavirus pandemic. Now, the consequences of the Iran-Iraq War are also taking effect: Kerosene is becoming scarce, and there are fierce disputes with the workforce. External and internal turmoil – things couldn’t be worse for Lufthansa.
“Perhaps six weeks or so” is all the aviation fuel in Europe will last, said Fatih Birol, head of the International Energy Agency, in an interview with the American news agency AP a few days ago. “If we don’t get the Street of Hormuz reopened, I can tell you that we will soon hear that some flights from city A to city B could be canceled due to fuel shortages.”
Refinery capacity in Europe is limited, and not all refineries can produce kerosene. The EU recently imported around a third of its finished kerosene, three-quarters of it came from the Persian Gulf. According to figures from the German Petroleum Industry Association (en2x), Germany can still largely supply itself with kerosene. However, “Our kerosene suppliers are changing their forecast periods and are no longer willing to provide a forecast for more than a month,” Lufthansa board member Grazia Vittadini, responsible for procurement, told Reuters.
Many airports are also reliant on fixed supply chains. Those that depend on deliveries by rail or ship cannot always simply switch to truck deliveries. Aircraft already require more kerosene on flights to Asia because they have to fly around Russia – now they also have to avoid the Gulf region – the routes are getting longer, and fuel demand is increasing.
It’s nearly impossible to prepare for a global crisis of this kind, and compared to the struggling Asian airlines, Lufthansa is actually in relatively good shape. But there’s a major problem: The group’s core brand, “Lufthansa Classic,” is struggling financially, a situation the management readily blames on the pilots’ high salaries. The pilots, in turn, are fighting for better company pensions. No concessions are in sight. Instead, the board has been pursuing a different strategy for some time: It’s constantly establishing new business units, whose employees are often hired under more favorable conditions than those of the core brand. The company now has a total of 14 such units.
CEO Carsten Spohr seems to view Lufthansa’s dealings with the unions UFO and Vereinigung Cockpit (VC) necessary for its survival. This doesn’t contribute to internal peace and overshadows the celebratory images of the company’s centenary. The latest developments illustrate just how complicated the situation is: The day after the anniversary celebration, Lufthansa announced it would be closing its operating unit, “Lufthansa Cityline,” this weekend. The explanation that increased kerosene costs isn’t convincing everyone: Cityline, with just 27 aircraft, was already slated for closure at the end of the year. The escalating conflicts suggest that the labor disputes at Lufthansa are unlikely to end anytime soon. It’s also impossible to predict how passengers will react to the new global uncertainties.
Johanna Wenninger-Muhr
Sources: Reuters, FAS, Lufthansa