Germany's leading airline group, Lufthansa, announced on Monday that it will cut 4,000 jobs, or nearly 4% of its workforce, a move underscoring the continued slump gripping Europe's largest economy and the airline giant.
Hit by walkouts, aircraft delivery delays, and rising costs, Lufthansa's earnings tumbled by a fifth in 2024, and profitability has fallen behind that of its leading European rivals.
The news comes against a bleak backdrop for Europe's biggest economy, which is struggling to recover from a long downturn that is weighing on many of Germany's leading companies.
The job cuts, to be carried out by 2030, will mostly be in Germany, targeting administrative roles rather than jobs such as pilots and cabin crew.
Lufthansa – which operates Eurowings, Austrian, Swiss, and Brussels Airlines and has acquired a stake in Italy's ITA – said it is targeting savings of around 300 million euros ($350 million) between 2028 and 2030.
The group aims to increase cooperation among its various parts.
"In particular, the profound changes brought about by digitalization and the increased use of artificial intelligence will lead to greater efficiency in many areas and processes," it said.
The group employs around 103,000 people.
'Drastic cuts'
Trade union Verdi, which represents Lufthansa office staff, vowed to fight the "drastic cuts."
It blamed in particular rising costs facing the aviation sector, from airport charges to new environmental rules.
"German and European aviation policy bears a large share of the responsibility for this development," said union representative Marvin Reschinsky, urging the German government to take action to help the sector.
Lufthansa had enjoyed bumper profits for a long period after the COVID-19 pandemic, as travel demand rebounded.
However, 2024 proved to be a difficult year, as staff staged a series of walkouts to demand higher pay to compensate for inflation, while operating costs continued to rise sharply.
The group issued two profit warnings last year and launched a turnaround program at its flagship carrier.
Its closely watched operating profit margin slipped to 4.4%, behind those of key European rivals IAG and Air France-KLM.
On Monday, Lufthansa set new financial targets for 2028-2030, including a margin of 8% to 10%, but analysts immediately suggested its goals were overly ambitious.
More problems loom. Lufthansa pilots have been voting on whether to stage a strike after pay talks failed, with the results of the ballot expected on Tuesday.
Beyond the aviation sector, other leading companies in Germany, particularly in the auto sector, have been announcing job cuts as they contend with high manufacturing costs and growing competition from China.