Having experienced near bankruptcy in 1992 due to enhanced competition and a sharp decline in air traffic during the Gulf War coupled with a global recession, Lufthansa achieved a dramatic turnaround (Bruch, 2008). An awareness of serious crisis began to spread in early 1992, but the firm continued to hire new employees. With only 14 days of operating cash requirements in hand, CEO Jurgen Weber went to the major German banks to ask for money to pay salaries and only one state-owned institution (Kreditanstadt Fur Wladeraufbau) was willing to fund the company.
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, Lufthansa's strengths, weaknesses, opportunities, and threats can be identified. Its strengths, based upon the Star Alliance, include its scale and scope of operations, a return to strong profits and margins, and diversified geographical spread. Conversely, weaknesses include comparatively weak revenue growth, limits to employee productivity, and a relatively sluggish performance within its Logistics division.
As of 2001 and 2003, when Bruch (2008) ...