German flag carrier Lufthansa said on Thursday that it was shuttering its Lufthansa CityLine short-haul subsidiary airline after its flight attendants and pilots went on strike, and as part of a broader plan of action to respond to surging jet fuel costs.
Although Lufthansa will officially close CityLine on Saturday, flight attendants and pilots are currently taking part in a multi-day walkout that effectively means the airline is closing with immediate effect.
Lufthansa already intended to close CityLine at some point in the near future, with operations moving to a newer subsidiary known as Lufthansa City Airlines, where aircrew are paid significantly less and have fewer benefits than their coworkers at CityLine.
Thursday’s announcement, however, significantly accelerates that plan. Lufthansa said all 27 aircraft assigned to the CityLine brand will be permanently removed from the flight program as of April 18, “in order to reduce further losses of the loss-making airline.”
Lufthansa said it had previously offered pilots and flight attendants employed at CityLine the opportunity to transfer to City Airlines, where they would initially be employed on “comparable compensation conditions” to CityLine before transferring to the much lower pay of City Airlines.
In a statement, Lufthansa noted that the “goal remains to enable crews of Lufthansa CityLine to have options for a professional perspective within the Lufthansa Group.”
The sudden closure of CityLine is, however, just one step of a broader plan to slash costs in response to strike costs and rising oil prices:
- The Lufthansa Group plans to remove six long-haul aircraft from its mainline Lufthansa brand at the end of the summer flying season: The last four gas-guzzling Airbus A340-600 aircraft in the Lufthansa fleet will be permanently retired in October. Two Boeing 747-400s will be grounded in October and permanently retired in 2027.
- More medium and long-haul routes will be transferred from the mainline Lufthansa brand to newer subsidiaries, where staff costs are much lower. Around five aircraft will be transferred from Lufthansa to other airlines within the group.
- Nine Airbus A350-900 aircraft will be transferred to the Discover Airlines, a new leisure-oriented airline brand where staff are employed on cheaper contracts.
- 4,000 head office jobs will be cut by 2030.
“The package for accelerated implementation of fleet and capacity measures is unavoidable in light of the sharply increased kerosene costs and geopolitical instability,” commented Till Streichert, the Lufthansa Group’s chief financial officer.
“The goal is to focus our short- and medium-haul platforms more clearly and make them more competitive. In this regard, we had already identified the prospective removal of CityLine from our program as part of our strategic development for some time, independently of the current geopolitical crisis.”
Streichert continued: “The current crisis is now forcing us to implement this measure earlier. This is a painful step, particularly with regard to the colleagues at Lufthansa CityLine. It is therefore all the more important now to find continued employment opportunities within the Group.”
Lufthansa currently hedges around 80% of its jet fuel requirements, meaning that the group has already locked in a price for this proportion of its annual jet fuel needs. As a result, Lufthansa will not be immediately affected by the current surge in oil prices.
However, Lufthansa says the measures announced on Thursday will help it reduce fuel costs on the remaining 20% of unhedged fuel. The airline claims that the removal of older CRJ aircraft used by CityLine, along with the grounding of aircraft like the A340-600s and 747-400s, will help it reduce the cost burden by around 10%.
Flight attendants at Lufthansa, Lufthansa CityLine, and Eurowings have been on strike since Monday in an increasingly bitter dispute over pension plans, work rules, and the future of the CityLine brand.
The Vereinigung Cockpit union, which represents pilots, claims Lufthansa has rejected an offer it tabled to move the dispute to binding independent arbitration.
