Lufthansa Analysis

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, L

Related Essays

United Airlines .... Can Lufthansa and British Airways really survive in a competitive world? .... Accounting and financial analysis are valuable tools for managers, but they must .... (1525 6 )

European Low-Cost Airlines .... The mathematical analysis of the principles of decision- making through the use of .... British Airways, Lufthansa, and Air France will become even stronger in a .... (9551 38 )

BRITISH AIRWAYS .... AN ANALYSIS OF BA'S INTERNAL AND EXTERNAL RELATIONSHIPS British Airways has long .... Jul 12, 2004): np bmi british midland, British Airways, KLM, Lufthansa and SAS .... (3265 13 )

Boeing Company Mission and Strategy .... Lufthansa has already become the European launch customer for Connexion. .... future of the Boeing company corporate culture STRATEGIC FACTOR ANALYSIS SUMMARY (SFAS .... (9399 38 )

Iraqi Invasion of Kuwait POWER POLITICS IN A WORLD OF FLOWS .... The resulting analysis may be called neofeudal. .... (The name of the German airline, Lufthansa, would be a precisely accurate term for such a league.) The shift in .... (10254 41 )

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

Category: Business - L