SWOT analysis of Lufthansa

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SWOT analysis of Lufthansa

This is a detailed SWOT analysis of Lufthansa. It aims to analyse the strengths and the weaknesses of the airline. It also aims to explore the opportunities and the threats facing it. Lufthansa is a German airline which operates from two main hubs: Frankfurt airport and Munich airport.

 

Strengths of Lufthansa

Lufthansa is one of the largest airlines in Europe. It is owned by The Lufthansa Group which has operations around the world with more than 550 subsidiaries and investment companies in its portfolio. Its largest business segment is passenger transportation where Lufthansa plays a significant role (Lufthansa, 2022).

 

Lufthansa is one of the founding members of Star Alliance which is the world’s largest airline alliance. It serves several domestic destinations and flies to 208 international destinations in 76 countries (Flight Connections, 2022). It has codeshare agreement with a number of airlines e.g. Air Canada, Air China, Air India, Air New Zealand, Cathay Pacific, Etihad Airways, and Alaska Airlines.

 

Skytrax (a British rating agency) awarded 5 stars to Lufthansa several years back making it the first 5-star airline in Europe. The same rating agency has chosen Lufthansa as the 3rd ‘Best Airline in Europe’ in 2022 (Skytrax, 2022). Lufthansa has also received different awards and accolades from different organisations over the years.

 

Lufthansa offers passengers a number of excellent in-flight services. For instance, the latest blockbusters, music, games, Internet access on board, e-journals, pre-flight shopping, and an extensive selection of food and beverages entertain the passengers very well.

 

The Lufthansa Group’ revenue in the fiscal year 2021 was 16.8 billion euros which is around 24% more than in the previous year. This success has been attributed to several factors i.e. an increase in the number of passengers, changes and restructuring of the company, and cost reductions (Lufthansa, 2022).

 

Weaknesses of Lufthansa

The discussion on weaknesses is a key element of this SWOT analysis of Lufthansa. According to Harper (2022) Lufthansa has plans to scrap more than 3,000 flights in the summer 2022. It has blamed unavailability of many employees and resources for the cancellations in addition to external environmental challenges. While this is an honest admission, it also shows that Lufthansa needs to up its game in personnel management.

 

Lufthansa has been slow in resolving industrial disputes over the years. Its relations with the pilots have been very challenging and have resulted in a number of industrial strikes, cancellations of many flights, and financial losses.

 

Many employees of Lufthansa are not happy and have shared their dissatisfaction with different media outlets. Mismanagement, cost-cutting activities, and laying off employees in massive numbers have been the main reasons for this. According to a report published in Reuters (2022), employees have called the airline to stop it ‘cost-cutting craziness’ and accused it of being responsible for the recent chaos at airports.

 

Opportunities for Lufthansa

North America is the most profitable market for Lufthansa where it has a strong presence. Its aim to enhance its services could help it in capturing a larger share of the market. It has partnered with other airlines to offer code-share services, and this could help it in enhancing its reach. Likewise, exploring new destinations within this market is worth the effort.

 

Due to increases in consumer purchasing power in many countries, many people would like to travel aboard for holidays. In fact, Europe has a very good number of great tourist destinations which attract tourists from around the world and as a result offers opportunities for growth for an airline such as Lufthansa.

 

Threats to Lufthansa

Threat is the last element to address in this SWOT analysis of Lufthansa. There is no doubt that Lufthansa faces many fierce competitors in Europe and beyond. Its main competitors include but not limited to British Airways, Air France, Singapore Airlines, Qantas Airways, Etihad Airways, Emirates, Turkish Airlines, and Virgin Atlantic.

 

Lufthansa faces stiff competition from low-cost carriers, and this could be a major threat. It is a full-service airline and does not cater to low-cost passengers. This makes it vulnerable to giants such as EasyJet and Ryanair which are very powerful in the European market and provide no-frill services.

 

High labour costs, and rising fuel prices are also challenging Lufthansa and many other airlines constantly. Unsurprisingly, global political tensions and uncertainties have been blamed for being a major factor particularly for fuel price hikes. In fact, rising fuel costs played a big role in Lufthansa’s financial misery in the past.

 

Summary of SWOT analysis of Lufthansa

The analysis demonstrates that Lufthansa has several good strengths. However, it must improve its HR strategies to encourages employees to stay with it for a longer period. Likewise, as it faces stiff competition from low-cost carriers, it may have to diversify its services to remain competitive in the future.

 

The airline industry is extremely competitive. Therefore, Lufthansa should pay close attention to the changing environment around it. It should identify any potential threats posed by the environment and take appropriate measures to tackle them.

 

Today’s cut-throat competition and rapid changes in the market have forced airlines to adopt new strategies. A well-defined strategy is therefore the key to success for any company. This SWOT Analysis has been useful to identify Lufthansa’s strengths, weaknesses, opportunities, and threats, and recommend it appropriate measures to tackle them.

 

We hope the article ‘SWOT analysis of Lufthansa’ has been helpful. Please share the article link on social media to support our work. You may also like reading SWOT analysis of EasyJet and SWOT analysis of Air France. Other relevant articles for you are:

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Last update: 10 August 2022

References:

Flight Connections (2022) Lufthansa, available at: https://www.flightconnections.com/route-map-lufthansa-lh (accessed 09 August 2022)

Harper, C. (2022) Major airline Lufthansa issues statement after it plans to scrap 3,000 flights, available at: https://www.birminghammail.co.uk/travel/major-airline-lufthansa-issues-statement-24350361 (accessed 09 August 2022)

Lufthansa (2022) Lufthansa Group, available at: https://www.lufthansagroup.com/en/company.html  (accessed 10 August 2022)

Reuters (2022) Lufthansa staff call for an end to cost-cutting amid airport chaos, available at: https://www.reuters.com/business/aerospace-defense/lufthansa-staff-call-an-end-cost-cutting-amid-airport-chaos-2022-07-06/ (accessed 08 August 2022)

Skytrax (2022) Best Airlines 2021 by Region, available at: https://www.worldairlineawards.com/best-airlines-2021-by-region/ (accessed 10 August 2022)

Author: M Rahman

M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.