Lufthansa Analysis

The turnaround as described by Bruch (2008) began with a four week program on change management which then led to a meeting of 20 senior managers during which issues regarding radical changes were introduced. A series of 123 projects that were designed to reduce costs were put into action with implementation continuing in 2003. Most were completed during the turnaround but the balance of 30 percent of these programs were delayed in order to obtain union approval. The major transformation occurring at Lufthansa was its transition from a state owned airline to a private aviation group and a reorganization into specific business segments characterized as a Star Alliance or strategic network which linked each unit of the business in a complex arrangement of relationships that segmented Lufthansa's original business while allying it with other major carriers.

Using the techniques of a SWOT analysis, L

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of projects were implemented under the D Check initiative, but the terrorist attack on the United States on September 11, 2001 created a global crisis in the earlike industry, leading to dramatic declines in passenger numbers and freight along with new costs for reinforced security measures and increased insurance rates. Globally, the airline industry experienced Euro 15 billion in losses, a phenomenon which negatively impacted the industry and led competitors such as Swissair and Sabena to file for bankruptcy and sending approximately 400,000 people in the industry into unemployment. At this juncture, Lufthansa needed to develop a new action plan in which reducing the cost of human resources or staffing was critical. The corporate-level strategy pursued by the firm was downsizing, capacity reduction, elimination of certain routes, a retreat from investment, and programs that were designed to enhance cash flow. As of 2003, Lufthansa was clearly in crisis. Its business-level strategy also involved strong, internal segmentation to offer services to the low cost market to defend against competition from airlines serving local markets as well as a reexamination of key leaders and their efficacy. A new CEO, Wolfgang Mayrhube
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Approximate Word count = 1298
Approximate Pages = 5 (250 words per page)

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