INDEX

SUMMARY..................................................................................3
INTRODUCTION AND HISTORY...................................................6
INTRODUCTION........................................................................................... 6
HISTORY...................................................................................................... 6

GOALS AND METHOLOGY...........................................................9

COMERCIAL PLAN AND MARKETING PLAN...............................10
COMMERCIAL PLAN................................................................................... 10
MARKETING PLAN...................................................................................... 12

HUMAN RESOURCES PLAN.......................................................13

Personnel marketing and selection...........................................................13
Principles of a Human Resource Policy for Change Management and
Diversity.................................................................................................... 14
Strengthening of competitiveness, thereto:.........................................................14
Apprenticeships in the Lufthansa Group...................................................14
University marketing and development of high potentials........................14
Lufthansa School of Business....................................................................14
Controlling Performance Indicators........................................................14
Reintegration and prevention...................................................................15

FINANCIAL PLAN......................................................................16
Annual Report 2010.................................................................................. 17

OPERATING PLAN.....................................................................18
ORGANISATIONAL CHART..........................................................................18
HEADQUARTERS........................................................................................ 19
FLEET........................................................................................................ 20
ALLIANCES................................................................................................ 22
IT............................................................................................................... 22
STRATEGIC PLAN....................................................................................... 23
Guidelines and strategic alignment...........................................................23
Value-based management........................................................................23
Opportunity and risk management system...............................................24

SWOT ANALYSIS.......................................................................24
CONCLUSION............................................................................25

SUMMARY
This project concerns the German company Lufthansa airlines. I have chosen this company as it
is leader Airline Company in Europe in terms of passengers and the fourth in the whole world
and I think it is important to know how has this company has succeed since its creation and how
it has managed to get to this leader position. Lufthansa, together with its partners flies to 410
destinations and has more or less 710 aircrafts.
When getting to the Introduction section and nearly in all the work you will read the words Star
Alliance. This is an important part of the project as Lufthansa is a founding member of Star

Alliance, which is the world's largest airline.

Concerning history, what is important to highlight is that since its creation and until
nowadays Lufthansa has experience changes due to war, crisis and the birth of new and
strong competence (low cost airlines) but in spite of these problems, it has managed to
succeed until the point of being one of the worlds most important airlines company.
Lufthansa has a vision that includes profitability and sustainability growth. This
improves the companys benefits and in these changing environments helps it to meet its
customers demand.
The company is continuously thinking in safety, quality and innovation and this makes
it more sustainable and reduces its environmental impact. This happens thanks to its
advance technology that improves Lufthansas opportunities in the market.
Lufthansas marketing campaigns emphasize on core brand values including quality,
innovation and strong industry leadership. This attracts more business and more
frequent flyers. Thats why Lufthansa is positioned as an Airline that we can trust and
rely on that is why its marketing campaign is focused on the customer.
Lufthansas application process is characterized by being openness as well as efficiency
so consequently by being transparent and fair.
Lufthansas employees are characterized because of its diversity in terms of gender,
religion, ideology, nationality and ethnicity, sexual orientation, as well as disability.
Lufthansa takes these differences between people as an opportunity.
The training process is of high importance because qualified employees help the
company to stay in a leader position. Lufthansa not only enables traditional training in
cooperation with the chambers of commerce, but also continuously runs a significant
number of in-house courses.
Referring to Health and safety conditions are important factors which are inside the
groups mission statement.
3

Lufthansa has its own Medical Service whose work concentrates on industrial medicine
and aviation medicine.
Identified risks are evaluated thats why medical checkups of the staff ensure the impact
of protective measurement to reduce or avoid risks.
Inside this section of health and safety I think it is important to include in this summary
that a reintegration program that measures for employees with recurrent or longer
illnesses have been available at Lufthansa for a long time.
Now the Human Resources Section is briefly explained so now lets see what
Lufthansas financial plan has important.
In the Financial Plan section Lufthansas 2010 Annual Report is shown. What it is
important to highlight of this graph is that in spite of the crisis Lufthansa has not lose
money but furthermore in has managed to succeed increasing its revenue and improving
its position.
This is an important point as the crisis has affected and is now affecting the entire
worlds company making them lose money and even having to close. Also an important
factor to take into account is that with the birth of new and strong competence some
important airlines are losing a lot of money due to the preference of the customers on
economic flights more that in comfortable and high quality airlines. But as you can see
in the graph Lufthansa has manage to stay with its loyal customers and also has increase
its number of passenger from 2009 to 2010.
Concerning destinations, as I have written above, Lufthansa together with all its partners
flies to nearly 410 destinations. But what it is more, it is opening new airports
expanding its networks and increasing the number of destinations. Some examples are
Bergen (Norway) opened the 30th of March 2008 and Billund (Denmark) opened the 30
of March of the year 2008.
Lufthansas fleets include aircraft of almost every size. There are four types of fleets the
long haul fleet, the medium haul fleet, the short haul fleet and the cargo fleet. Each of
them includes a number of plains that are named below in that section.
Referring to Lufthansas Alliances, as I have say before, the most important part here is
the Star Alliance.
But under Lufthansa regional brand, some airlines such as Dolomiti, Augsburg Airways,
Lufthansa CityLine, Contact Air and Eurowingscan operate across Europe as well as
flying through Europe and furthermore, it can manage flights to international
destinations.
Concerning Lufthansa partner airlines, it has bilateral cooperation accords with some
host quality airlines including Air India, Air Malta, Cirrus Airlines, Ethiopean Airlines,
Luxair, Mexicana, Qatar Airways and TACA.
4

Lufthansas strategic plan refers to the vision of the company, its growth in the global
market, the development of new products and the advance technology that Lufthansa is
using in order to improve or to protect the environment.
Also other strategic measures is the opening of new destinations expanding its market
networks and the well managing of this companys resources making it to be nowadays
one of the most important airline company of the world.

INTRODUCTION AND HISTORY

INTRODUCTION
Deutsche Lufthansa is the flag carrier of Germany and the largest airline in Europe
concerning the overall of passengers carried. The name of the company is derived from
Luft (the German word for "air"), and Hansa (after the Hanseatic League, a powerful
medieval trading group).
The airline is the world's fourth-largest airline in terms of overall passengers carried,
operating services to 18 domestic destinations and 203 international destinations in 78
countries across Africa, Americas, Asia and Europe. Together with its partners
Lufthansa services around 410 destinations. With more or less 710 aircraft it has the
second-largest passenger airline fleet in the world when combined with its subsidiaries.
Lufthansa's registered office and corporate headquarters is in Deutz, Cologne, with its
main operations base (Lufthansa Aviation Center (LAC) and primary traffic hub at
Frankfurt Airport in Frankfurt am Main with a second hub at Munich Airport. The
majority of Lufthansa's pilots, ground staff, and flight attendants are based in Frankfurt.
Lufthansa is a founding member of Star Alliance, which is the world's largest airline
alliance that was formed in the year 1997. The Lufthansa Group employs 117,000
people of 146 nationalities. In 2010, more than 90 million passengers chose flying with
this company

HISTORY
So as to make it clearly I am going to divide the companys history into different parts making a
brief summary with the important events that happened during those times. It goes from the
twenties to nowadays.

Twenties
A number of a small aviation companies sprung up in Germany. Their aircraft made
wobbly trips, back and forth, from one city to another. Only two airlines survived the
all-out competitive battle: Deutscher Aero Llyod and Junkers Luftverkehr. These two
joined forces to found Deutsche Luft Hansa AG on January 6, 1926, the flight path
started to point upward.

Thirties
Larger aircraft could now fly longer routes and therein lay the future, not in the hopand-skip-routes of the early years, which merely cost subsidy money. For Lufthansa,
South America and the Far East now drew within reach.

Forties- The war and its difficulties.

Europe was in war. The Reichs government obligated Lufthansa by law to provide
services, transport flights and technical operations. All Lufthansa documents, including
the annual report, were stamped Secret!
Connections to neutral countries were very important in those times. In the year 1945
occurred the over and out for Germany and for Lufthansa.

Fifties
Difficult and insecure times came during the years when the Cold War took place.
During this time, two companies named Deutsche Lufthansa took to
the skies;
Americans and British controlled the west while Russians and
Germans pilots share the control of the east.
This setup was not meant to last, so
consequently the new Lufthansa developed in
new centers. First in Hamburg and Cologne,
and later on, in Frankfurt.

Sixties
New and developed jet aircraft with their higher speeds, increased capacities and
improved ranges, revolutioning the world air transport as never before.
In 1960, the fourengined Boeing B707s flew on Lufthansas long-haul routes; The
airline restructured its entire route network. These were challenging times for this
company that was so young.

Seventies
Everything was new and different aboard the wide-body jets, the Jumbos, which
arrived at Lufthansa just in time to kick off the new decade. But this joy was not going
to get too long due to the two oil crisis, first in 1973 and then again in 1979.
Lufthansas engineers applied their combined expertise to reduce fuel consumption and
were successful.

Eighties

Air space is being crowded more and more during these

times so aircraft had evolved into a means of mass
transport.
Lufthansa was changing itself into a competitive
corporation with modern organizational structures. So at the end of the decade,
Lufthansa made its dream come true, a reunited Germany and Lufthansas return to its
home town, Berlin.

Nineties
During the early 1990s another crisis took place and touched all of the airlines which
had took look for solutions for their survival.
Lufthansa sought alliances and cooperations, and eventually found its way with other
airlines into the "Star Alliance," which quickly become the industry leader. A "new,"
entirely restructured Lufthansa, fully privatized in 1997, now soared toward success.
Lufthansa was fully prepared to take off for the new millennium.

2000- to present

2001: Lufthansa Aviation Group focuses on innovation and quality. Placement

of orders for 15 Airbus A380 megaliners charts the airlines path into the future.
2001-2005: In spite of the crisis, Lufthansa remains increasing. With the Future
European Operations programme, the airline reorganises its regional markets,
while gaining new partner airlines to expand the Star Alliance global route
network.
2005: Lufthansa celebrates the 50th anniversary of the new Lufthansa following
its postwar re-entry into the airline community. SWISS is integrated as an
independent airline in the Lufthansa Group.
2006-2008: Lufthansa creates new perspectives for Germany's future as a
business location: Lufthansa orders 20 Boeing 747-8s. Preparations for the A380
include route proving with Airbus, a new A380 maintenance hangar and a new
terminal area in Frankfurt. The Lufthansa Aviation Center becomes an
architectural flagship. Lufthansa Cargo founds the cargo airline AeroLogic with
DHL Express.
Further partners strengthen the Star Alliance, which now encompasses 21
members.

GOALS AND METHOLOGY

The goals of this essay is to make a deep analysis of Lufthansa Airline Company, how it
has suffered changes through its history but has managed to improve and succeed until
becoming nowadays in Europes leading Airline Company recognized all over the
world.
The goals will be achieved by analyzing in a deep way how the company works by
going through its Commercial Plan, showing the companys future vision, strategy and
also its improved products and advanced technology; its Marketing Plan, explaining
how the company promotes itself and make the necessary advertisement so as to catch
new customers and maintain the loyal ones; its Human Resources Plan, by illustrating
how the company selects its employees how it trains them and in which condition
concerning health and security they work; making a quantitative analysis of its financial
plan by examining its recent data and comparing it to last years in the Financial Plan;
the Operating Plan, that will define how this huge company is organized by examining
its organizational chart. I will also explain the different destinations this Airline can take
the customer or the cargo and some future projects of expanding its networks, the
different fleets and the alliances highlighting the Star Alliance and finally its strategic
plan. Finally a brief SWOT analysis will be included so as to see which are the
companys strengths, weaknesses, opportunities and threats the company has.
Using this methology of analyzing deeply how the company works and which are the
future plans for expanding the company as well as its financial data will help to achieve
the essays goals.

COMERCIAL PLAN AND

MARKETING PLAN
COMMERCIAL PLAN
Deutsche Lufthansa AG shows vision: its course is defined in terms of sustainable and
profitable growth. In recent years and in spite of the crisis the company have extended
its leadership in long-haul growth markets and stabilized its market share on short and
medium-haul routes. This has enabled us to increase the profitability of its business
considerably. With excellent products Lufthansa meet its customers higher demands in
a changing competitive environment.
To do so Lufthansa rely on its successful model of a modular airline and aviation
Group, this improves the performance of each and every company in it. In a strong
corporate group with economies of scale and a global network to realize synergies and
transfer knowledge systematically the group airlines and service segments can apply
their individual strengths with greater force. By thinking continuously for safety, quality
and innovations that make the business more socially sustainable and reduce its
environmental impact we use leading-edge technology to improve the companys
opportunities in the market.
As you can see there are five words that are highlighted, this means that these words
form the basis of Lufthansa Company and relies in them to succeed, improve and to stay
as one of the leader airline companies of the world.
So as to make it clearly explain lets see what each of these words mean to this leading
company.
1. VISION: Remaining focused on the way forward and ensuring that potential is
realized are the defining features of its strategy. This success can be seen in the
way Lufthansa has extended its lead in the long-haul sector and secured market
share in European traffic, as well as in the dynamic recovery of the companys
cargo business.
Lufthansa Company is trying to sharpen in their profile in growth regions. After
expanding successfully on the African continent they are now turning the focus
of its passenger traffic activities to Latin America and Asia.
At the same time this company has to hold their ground in an ever more
international market, which is characterized by intense competition and
dominated by increasingly unequal conditions and regional circumstances.
2. MARKETS : Flexibility is one of its greatest strengths. Lufthansa has actively
tackled the changes that the crisis made necessary by restructuring European
traffic for instance. In their other business segments and airline group companies
10

Lufthansa is also carrying out cost management and turnaround projects

energetically. At the same time this leading company is strengthening its market
position and exploiting specific growth opportunities.
Despite reducing the number of flights, Lufthansa Passenger Airlines was able to
expand available seat kilometers considerably in 2010 compared with the
previous year. This is principally the result of the ongoing fleet restructuring and
focused network expansion.
3. PRODUCT: Attractive and comfortable, yet cost-effective and functional at
the same time a good product has to satisfy many criteria and meet the
traditionally high quality standards. Lufthansa tries to meet these criteria in order
to satisfy their customers needs. The result of this is excellent products both on
the ground and in the air.
The constantly changing competitive landscape demands forward-looking
innovations. Thats is why Lufthansa will be investing over EUR 1bn in new
products for 2015: the Europe cabin, the in-flight entertainment system or
FlyNet on board, the gate extensions in Frankfurt and Terminal 2 in Munich or
the expansion of the lounges on the ground at the moment there are more
novelties being both planned and implemented than ever before.
Constant product optimization based on efficiency and functionality has proven
its worth for this leading Company.
4. GROUP: An interesting sentence that has caught my attention is the following:
Individually strong, jointly successful
In Lufthansas philosophy the decentralized market strategy plays an important
role. This applies equally to the business segments in the Group and to the group
airlines, which work autonomously in their home markets, with their own
identity and their own product.
Here, is of course indispensable and essential to talk about Star Alliance as it is
the largest air transport grouping in the world and is still growing.
The accession of Avianca-TACA and Copa Airlines planned for 2012 is also of
great strategic significance.
They will make it possible to expand the alliances presence considerably in the
Latin American growth market. Lufthansa is assisting Avianca- TACA as a kind
of mentor to prepare for membership of the alliance. It also supports Ethiopian
Airlines on its path to Star Alliance membership planned for 2011.
5. TECHNOLOGY : Lufthansa stands for technology at the highest level. Safety
and added value for customers are the indispensable words when it talking of
developing leading-edge solutions. We strive for innovations that benefit society
and the environment as well. Indeed, sustainable business is an essential as well
as element of Lufthansas corporate philosophy.

11

Technical competence has always been one of the companys strengths. It is

considered Lufthansas technology to be a key driver of growth and an important
contribution to corporate responsibility.
Global air traffic is responsible for two per cent of all man-made CO2 emissions.
Lufthansa is searching for of solutions in order to make its individual
contribution to climate protection. So, concerning this climate protection, fleet
renewal, lighter materials, improved infrastructure, test programs with
alternative fuels and quieter engines are some of the examples of the
technological progress of this company in terms of environmental protection.

MARKETING PLAN
Concerning Lufthansa marketing strategy in my opinion it would be interesting to
mention that in the year 2009 Airline Strategy Awards judges praised Lufthansas ability
to create sub brands in different market segments without cannibalizing its own product.
The Lufthansas marketing strategy is including the advertisement messages through
different types of media channels in a strategic way so as to convey one message in
one voice. The advertising campaign incorporates both print and online media in
communicating its message.
The newest Lufthansa advertising campaign being deployed is selected daily
newspapers, business magazines, special interest magazines and on advertising
billboards in Germany, as well as in International strategic markets. Online and mobile
banners are placed on selected international portals and websites. So with this marketing
strategy, the airline managed to keep Business and First Class revenue as a percentage
of traffic revenue well above that of the crisis level at around 40 per cent.
The Lufthansas campaign aims to emphasize on core brand values such as quality,
innovation and strong industry leadership that attracts more business and more frequent
flyers. Lufthansa is positioned as an Airline that we can trust and rely on that is why its
marketing campaign is focused on the customer.
The images, shots in natural, candid style of photography depicts individual from over
the world. But an interesting question could be why Lufthansa contextualize images?
Because by contextualizing the next and translating, Lufthansa can better relate to the
audience of each culture as the elements will be adjusted in a way that better suits the
target in each country. The way, together, the image and the text create striking
emotional message which appeals to a certain group of audience.
12

By selecting certain segments of the market, Lufthansa managed to increase

significantly the business and first class bookings and also the revenue from corporate
customers which rose by 12 per cent in 2010, driven by strong growth in Asia and North
America.

HUMAN RESOURCES PLAN

Personnel marketing and selection
Lufthansas application process is characterized by being openness as well as efficiency
so consequently by being transparent and fair
Its aim consists in attracting competent and committed employees. Thats the reason
why Lufthansa presents a realistic picture of the tasks within our company with all their
benefits but also possible disadvantages, so that applicants can make decisions that are
sustainable on a long-term basis.
The company not only tells the applicants what they expect of them but also give them
the opportunity to clearly assess their own capabilities and competencies. In this way it
makes it possible for the tasks to suit the expectations and qualifications of the
candidates.
Lufthansa uses high-quality and efficient tools and procedures for its personnel
recruitment and selection. This ensures that the company will receive differentiated and
substantiated information that makes an objective evaluation possible. The Internet
plays a substantial and very important role in the application process, since Lufthansa
significantly process applications via the Be-lufthansa.com portal. The portal also
gives the possibility to the applicants to use the Training Area to prepare for the
companys online tests, both anonymously and free of charge.

Diversity of employees
Lufthansas employees include people from all over the world. They are different in
many ways for example by: age, gender, religion, ideology, nationality and ethnicity,
sexual orientation, as well as disability. Other characteristic like personal experience is
also another important criteria. Thats why this diversity is an opportunity for the
airline company. People need to accept each other so as to work together in the best way
as possible.
Diversity makes possible the expansion of creativity; this increases innovation
capability and therefore contributes to corporate success.

13

Principles of a Human Resource Policy for Change

Management and Diversity
Strengthening of competitiveness, thereto:

facilitate innovation

appreciation of individuals

pro-active, inclusive human resource politics

prevention of misunderstandings

balance of professional and private issues

Training
Apprenticeships in the Lufthansa Group
Within this company, the training process is of high importance as qualified employees
help the company to stay in a leader position in the areas of quality and innovation
within the aviation market. Lufthansa not only enables traditional training in
cooperation with the chambers of commerce, but also continuously runs a significant
number of in-house courses for service professionals, so as to prepare future flight
attendants and ground station personnel for their work.

University marketing and development of high

potentials
Lufthansa also includes a program for junior talents called explorers and in this way
participants create long-term added-value for the company.

Lufthansa School of Business

"There's no better way to learn." Under this motto the Lufthansa School of Business
offers training and dialogue options for executives and employees across the entire
Lufthansa Group.

Controlling Performance Indicators

The promotion and development of employees is gaining importance with regard to
aspects of profitability as well. Longterm assessment of corporate education programs
becomes increasingly important for controlling, planning and reviewing of skills. As a
subsystem of personnel accounting and analysis, it aims at ensuring the manageability
of educational activities in order to facilitate the achievement of company goals
14

Health and Safety

Health and safety conditions are important factors included in the groups mission
statement.
Lufthansa has its own Medical Service whose work concentrates on industrial medicine
and aviation medicine. Employee representatives are involved in all important decisions
affecting Health and safety and health issues.
Identified risks are evaluated. Medical checkups of the staff ensure the impact of
protective measurement to reduce or avoid risks.
Technical equipment, installations in buildings and at work stations are updated
technologically. There are safety experts and physicians specialized in industrial
medicine who are consulted when important changes are going to happen or new work
processes are going to be introduced

In addition, safety commissioners and employees trained in first aid are present in all
work areas in order to help.

Reintegration and prevention

Measures promoting our employees health also focus in serving the long-term
preservation of the companys staffs health by means of preventative and supportive
measures. Reintegration measures for employees with recurrent or longer illnesses have
been available at Lufthansa for a long time. The companys social and medical services
support employees and their supervisors to ensure their workability.

15

FINANCIAL PLAN
2010

2009

Change
in %

Revenue and result

Total revenue
of which traffic revenue
Operating result
EBIT
EBITDA
Net profit/loss

m
m
m
m
m
m

27.324
22.268
876
1.335
3.049
1.131

22.283
17.604
130
191
1.838
-34

22,6
26,5
573,8
599,0
65,9

Key balance sheet and cash flow

statement figures
Total assets
Equity ratio
Net indebtedness
Cash flow from operating activities
Capital expenditure (gross)

m
%
m
m
m

29.320
28,4
1.596
3.075
2.273

26.392
23,5
2.195
1.991
2.405

11,1
4.9 pts
-27,3
54,4
-5,5

Key profitability and value creation

figures
Adjusted operating margin1)
EBITDA margin
CVA
CFROI

%
%
m
%

4,1
11,2
71
9,4

1,4
8,2
-858
4,2

2.7 pts
3.0 pts

16,36
2,47
0,60

11,75
-0,07

39,2

thousand
s

91.157

77.315

17,9

Lufthansa share
Share price at year-end
Earnings per share
Suggested dividend per share

5.2 pts

Traffic figures2)
Passengers

16

Freight and mail

Passenger load factor
Cargo load factor
Flights
Employees
Average number of employees
Employees as of 31.12.

thousand
tonnes
%
%
number

2.023
79,3
68,0
1.021.266

1.712
77,9
60,6
899.928

18,2
1.3 pts
7.4 pts
13,5

number
number

117.066
117.019

112.320
117.521

4,2
-0,4

Annual Report 2010

This graph shows us the difference concerning the annual report from last 2010 year and
2009. In my opinion it is very interesting because due to the crisis that is affecting
everybody around the world lots of companies such are air companies are closing or
losing money. Another important fact is that there is a lot of competence among airlines
because of the invention of low cost airlines. People have less money and they prefer
economy to quality and give more importance to flying in a cheaper way than in a more
comfortable way. What I want to say with this is that most of the air companies due to
the crisis are making very big efforts so as to survive and consequently, they are losing
money and their revenues and benefits are decreasing while their problems are
increasing. An example of this kind of airlines problems could be Quantas airline, an
Australian company that due to the crisis had to leave more than 80.000 passengers on
land and had problems because of strikes made by their employees.
Another example that is near us is the recent air traffic controllers strike in Spain. This
happened during the month of September of this year and it made the airline to cancel
many flights and to lose lot of money.
What I am trying to explain is that during these hard times that we are living and that is
affecting lots of important companies and airlines companies (as is the subject that
concerns us now) and as the graph shown above, Lufthansa is managing not only to
survive but to increase their benefits and improve their results.
How this company does have increase their affluent of passengers and so its revenue
concerning this topic from one year to another having this crisis problems and new hard
competence?
The airlines in the Passenger Airline Group made good use of the positive demand
trend. Passenger numbers went up sharply and at the same time the airlines continued

17

their cost management, realizing important synergies. Increased profitability meant that
a sound operating profit was earned again, in spite of non-recurring expenses.
Concerning the logistics segment the earnings turnaround was even more pronounced.
Lufthansa Cargo benefited particularly from the global economic recovery and the
boom in German exports. The measures taken in prior years to safeguard earnings
continued to have a strong effect. Following an operating loss in the previous year,
Lufthansa Cargo reported record profits in 2010.
So as to make a summary of what the graph shows lets make a brief explanation of
what have this company achieved during the year 2010.

Despite numerous one-off expenses it has achieved a great result for the year,
with positive earnings contributions from all segments. Austrian Airlines and
bmi have cut their losses considerably thanks to their restructuring.
In the first year after the crisis its financial indicators have made notable
progress back towards their targets or have already reached them. So it has
created value again.
The company rating has stabilized and the outlook was upgraded.
It also reflects the success of its chosen course, which is aimed at profitable
growth:
In the recent years of crisis Lufthansa kept its opportunities open. Thanks to its
far-sighted activities the Group is now able to take its full share of the dynamic
recovery in demand.
Their flexibility allowed its business segments to make adjustments at short
notice, both in crisis management and now again in the upswing. Its strong
financial profile meant it had various options available at all times.
The ongoing fleet renewal has reduced fuel consumption again and further
decoupled CO2 emissions from traffic growth.
Lufthansa not only developed stability in the crisis, but also much greater
profitability in the upswing.

OPERATING PLAN
Concerning this part of the work I am going to divide it into five parts so as to try to
explain the most important stuff included in this section.
I will start talking about the organization of this company and where its headquarters are
located; afterwards, I will write down the destinations where Lufthansa flights; then I
will tell you the companys fleet, this means with what kind of aircrafts does this
company flies with; moreover it will be explain the companys alliances and finally I
will talk about the companys strategic plan.
18

ORGANISATIONAL CHART
Deutsche Lufthansa AG acts as the parent company with an Executive Board that
consists of four members. The Executive Board is responsible for managing the Group,
determining its strategy and ensuring a sustainable increase in its value. The
Supervisory Board appoints and advises the Executive Board and monitors its activities.
The Lufthansa passenger airlines as well as the individual business segments are each
accountable for their business results. They are monitored by their own supervisory
boards, on which members of the Group Executive Board and top management are
represented.

HEADQUARTERS
Lufthansa's corporate headquarters is
located in Cologne. Several Lufthansa
departments are not located in the
headquarters; instead they are located in the
Lufthansa Aviation Center at Frankfurt
International
Airport
in
Flughafen,
Frankfurt. The departments include
Corporate
Communications,
Investor
Relations and Media Relations.

DESTINATION
19

Lufthansa Company flies to 18 domestic destinations and 203 international destinations

in 78 countries across Africa, Americas, Asia, and Europe. This includes destinations
served by subsidiaries Lufthansa CityLine and Lufthansa Regional as well as those
operated on behalf of Lufthansa by Cirrus Airlines and PrivatAir.

But
Lufthansa
is

expanding its
networks so as to flight to nearly all parts of the world thats why there have been new
opening as the ones I am writing below.

Bergen (Norway) from the 30th of March 2008

Billund (Denmark) from the 30th of March 2008

Bristol (UK) from the 30th of March 2008

Calgary (Canada) from the 14th of April 2008

Cluj (Romania) from the 31st of March 2008

Karachi and Lahore (Pakistan) from the 28th of October 2007

Klagenfurt (Austria) from the 30th of March 2008

Luanda (Angola) from the 1st of April 2008

Malabo (Equatorial Guinea) from the 1st of April 2008

Mumbai (India) ex Munich from 3 May 2008

Nanjing and Shenyang (China) from the 31st of March 2008

Orlando (US) from the 30th of October 2007

Pune (India) in Business Jet service from July 1, 2008

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Seattle (US) from the 30th of March 2008

Sibiu (Romania) from the 28th of October 2007

Singapore ex Munich from the 8th of June 2008

FLEET
The Lufthansa fleet includes aircraft of almost every size. There are four types of fleets:

1. THE

LONG HAUL FLEET: IT INCLUDES THESE TYPES OF

PLANES :

Airbus A380-800
Boeing B747-400
Airbus A340-600
Airbus A340-300
Airbus A330-300
Boeing BBJ 737-800 IGW

2. THE MEDIUM-HAUL

3. THE

FLEET

Airbus A321-100/200
Airbus A320-200
Airbus A319-100
Boeing B737-500
Boeing B737-300

SHORT -HAUL FLEET

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Embraer ERJ-195
Embraer ERJ-190
Avro RJ85 BAel146
Bombardier CRJ900
Bombardier CRJ700
ATR ATR72-500
Bombardier DH8-Q400

So as to make it clearly for you concerning Lufthansas fleet here are some data
of one of their aircraft. I have taken as example the Embraer ERJ-190.
Length 38.7 m
Wingspan 28.7 m
Height 10.6 m
Cruising speed 870 km/h
Max. altitude 12,500 m
Max.take-off weight 50,800 kg
Max. landing weight 45,000 kg
Range* 2,590 km
Cabin width 2.74 m S
Seats (max.)** 116

4. THE CARGO

FLEET

MD-11F

22

ALLIANCES
Alliances are fundamental to Lufthansas success. As youve read before in the history
part, Lufthansa is a member of Star Alliance and this gives it a lot of advantages. It
connects Europes regions with one another and with the world beyond.
Star Alliance groups 27 leading airlines that offer flights to nearly any point of the
world.
Under the Lufthansa regional brand, some airlines such as Dolomiti, Augsburg Airways,
Lufthansa CityLine, Contact Air and Eurowingscan operate across Europe as well as
flying through Europe and furthermore, it can manage flights to international
destionations.
Concerning Lufthansa partner airlines, it has bilateral cooperation accords with some
host qualitity airlines including Air India, Air Malta, Cirrus Airlines, Ethiopean Airlines,
Luxair, Mexicana, Qatar Airways and TACA.

IT
Lufthansa Systems provides consulting and IT services for selected industries and has a
leading position in the global aviation industry. It offers customized solutions for
industries and operates one of the most modern data centers in Europe. Lufthansa
Systems products and services provide added value for its customers in terms of
enhanced efficiency, reduced costs or increased profits.
IT solutions from Lufthansa Systems address all the business processes of an airline
including passenger and cargo services and furthermore, flight operations, and the
maintenance and overhaul of aircraft. The IT services provider is in charge of
integrating platforms, enabling customers to optimize their business processes and
reducing the complexity of IT through standardization.
Lufthansa Systems includes the entire range of IT services, such as consultancy, the
development and implementation of industry solutions as well as operation of a
23

companys own computer centre. Long-term project experience, a deep understanding

of complex business processes and strong technological know-how are the basis for the
continuous expansion of Lufthansa Systems' service offering across many industries.
Companies from different sectors, such as transport and logistics, as well as industry
rely on the expertise of Lufthansa Systems.

STRATEGIC PLAN
Concerning the companys strategic plan some of its strategy is defined above a in the
section respecting the commercial plan. I am referring to the vision of the company its
growth in the global market the development of new products or the advance
technology that Lufthansa is using in order to improve or to protect the environment.
In the Destination section you can see that Lufthansa is expanding in terms of opening
new networks so as to fly to nearly every part of the globe. This can be possible thanks
of the benefits that as you can read in the Annual Report Lufthansa has achieved thanks
of the good managing of its assets and to its group organization.
So what is going to be explained now is some further information about Lufthansa
Group Strategy.

Guidelines and strategic alignment

International air transport is a growth industry. Due to a dynamic market governed by
different trends in individual regions, the industry is influenced by a number of
regulatory and structural changes.
In keeping with the Groups guidelines, Lufthansas strategic alignment is aimed at
generating profitable growth in this environment. In this process, profitability is what is
more important for this company. Lufthansa is committed to shareholder value by way
of sustainable value creation that it is aimed especially to achieve by concentrating on
the core business, passenger transportation.

Value-based management
Since late 1999, Lufthansa has been working concerning the principles of value-based
management. The aim of this approach is to achieve a purposeful, long-term and
continuous increase in enterprise value in investors and lenders interests. The central
financial performance indicator at Lufthansa is cash value added (CVA). The CVA is
based on the return on investment expected by investors and lenders and provides
information about the value created over a given period.

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Opportunity and risk management system

As an internationally active airline, Lufthansa is exposed to both entrepreneurial and
industry-specific risks. With its constantly updated management systems, risks and
opportunities are identified at an early stage. Its risk strategy is unchanged and permits
the company to make use of business opportunities that arise as long as a risk-return
ratio that is in line with the market can be achieved and the risks are appropriate and
acceptable in the context of value creation.

SWOT ANALYSIS
OPPORTUNITIES :
STAR alliance
De regulation of airline industry
Government help
Synergies

THREATS:
Steep fall in air travel during the Gulf war
Recession led to an over capacity for the airline industry on a global basis
Seat Load Factor went down to 57% in Europe compared to a world wide 65%
Many major competitors

STRENGTHS :
Due to the German reunification, they enjoyed a boom while the industry faced a
severe market downturn
Increased passenger numbers by 11% due to the reunification
By summer 1999, the CEO had participated in over 200 town meetings
Entering in the Star Alliance
Intellectual capital (business school)
Existed for a good amount of time
Becoming more organized-promoting entrepreneurship and decision making, less
burocratic
Motivated employees-display strong morals and affiliation with the company

WEAKNESS:
Noticing crisis later than other companies
Non-German traits such as friendliness and modesty needed to improve customer
25

services
Operational area: punctuality, luggage safety, waiting periods, technical reliability,
telephone availability.

CONCLUSION
The German Airline company as it can be seen in the history section, has passed during its
history through hard times due to war and crisis but it has been able to recover from its
problems and succeed thanks to its innovating ideas, its aims of improving its market share by
focusing in sustainability and profitability growth, its marketing planning as in this way it
promotes the company by advertising and other types of promotion activities so as to gain
passenger and maintain the loyal ones and finally by a new a updated strategy that includes
advanced technology.
Going through the essay it is important so focus our attention in the commercial planning and in
the five words that are highlighted: vision, market, product, group and technology. These words
reflect in a brief way the company strategy and how the company works and succeeds.
Afterwards the marketing plan has showed us how the company emphasizes on core brand

values that include the terms of quality, innovation and strong industry leadership. This
attracts more business and more frequent flyers. Thats why Lufthansa is positioned as
an Airline that we can trust and rely on that is why its marketing campaign is focused on
the customer.
If this company has get into a pole position concerning Airlines Company is also thanks
to its employees and qualified stuff. These people who are very diverse are selected and
trained in a way that converts them in an opportunity and that makes them part of the
successful management of this company.
Lufthansa Airline Company is positioned in the first place in Europe concerning the
passengers carried. This is shown in the financial planning. Through the graph shown
above, some financial statements are clearly defined. Here is seen that compared to last
year Lufthansa has increase its revenues and benefits.
The next topic I have written about is the Operating planning. Here I have focused on
how the company is organized, its current and future destinations, which kind of fleets
does the company uses, its alliances highlighting the Star Alliance and finally the
company Strategy plan.
The essay concludes with a SWOT analysis showing Lufthansas strengths, weaknesses,
opportunities and threats. So as to highlight a statement of each of the four parts the SWOT
consist in I will highlight in Opportunities the government help; in Threats, the growth of new
airline companies including low cost airlines; in Strengths, the entering in the Star Alliace and
finally in Weaknesses, the crisis.
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27