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Lufthansa: still need to effectively integrate acquisitions
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September 2, 2010, Lufthansa's LH720 from Frankfurt to Beijing flight docked at the Capital Airport T3 Terminal, which is in the German Lufthansa airline's inaugural A380. As the air giant, A380 can carry passengers more than in any previous models are, and Lufthansa that carry more passengers without the need to open new flights, which will a good solution to the airlines operating costs and air traffic congestion problems. However, soon after the inaugural flight had a few setbacks, originally scheduled to fly the A380, one week to three shifts of one week intervals. Lufthansa has been lavish in the economic downturn to order the 15 A380 aircraft, and put into use, how to recover the investment cost has become the industry's concern. When the airline industry is still not able to get rid of the haze when the economic crisis, Lufthansa chose to acquire other airlines, and turned a profit since the second quarter of this year, does this mean that integration is the only way for the future development of aviation industry? On these issues, "China Business" reporter with the Lufthansa Group Chairman and CEO 沃尔夫冈麦 Asia Huber did in-depth exchanges. M & A integration is the only way M & A can enhance the overall competitiveness of the Group and its partners, all members of the overall profitability, so that the value of the Group for all to see. "China Business": Since last year, Lufthansa has acquired Brussels Airlines, British Midland Airways, Austrian Airlines stake. In 2010 the global airline industry mergers and acquisitions amounted to 12.8 billion, last year the figure was 82 million, Lufthansa is in this context that several airlines to complete this acquisition. However, after the completion of the acquisition, the first quarter of this year, Lufthansa is still a loss of 3 million euros, despite the improved results for the second quarter, but seem insufficient to prove that this decision is correct. In this regard, how do you see? 沃尔夫冈麦 Asia Huber: Lufthansa Airlines M & A This is a combination of several of their advantages in the long run, this initiative will enhance the overall competitiveness of the Group and its partners, all members of the overall profitability, The value of mergers and acquisitions both brought to Lufthansa's shareholders, customers, employees see, also allow a new member of the group felt. Now our joint network such as providing more choice of destination, Austrian Airlines on routes in Eastern Europe and Switzerland, made a very strong, and Brussels Airlines on routes in Africa well. With integrated network, we can help customers make better travel choices. Another advantage of the Lufthansa Group, which owns 5 different business models, such as cargo and aircraft maintenance, even in times of economic crisis, its operations would not be affected accordingly. Based on this, so during the crisis, Lufthansa Airlines, both achieved higher-than-industry average of good results, also reached higher than the industry average earnings growth and operating profit levels. "China Business": How do you look after the financial crisis the aviation industry development status, is that the merger and integration will be the only way for the development of the aviation industry, and why? 沃尔夫冈麦 Asia Huber: Aviation industry is currently in the process of great change, Lufthansa has been active in promoting and accelerate the pace of integration of the aviation industry, hoping to accelerate the integration of those who are integrated with the profitability of both and strategies to improve co-ordination with each other, but some of the advantages of pre-conditions and their own is more important than growth. For now, the Lufthansa Group has just added a new member: Austrian Airlines and British Midland Airways, will not consider further acquisitions. "China Business": from Lufthansa the second quarter of view, do you think that Lufthansa already had a crisis? 沃尔夫冈麦 Asia Huber: Over the past year in terms of the aviation industry is the most challenging year history, we have carried out all of the business re-assessment of the costs and make the appropriate adjustments to improve efficiency. We announced second quarter 2010 operating profit was 1.59 billion euros, compared with same period in 2009 increased nearly 3 times. Currently, Lufthansa has a clear demand and revenue recovery, I believe that this recovery is sustainable. In the passenger business, long distance transport services should be significantly faster recovery in Europe intercontinental traffic, which is what we seek the best cost-effective solutions, we work out even before the crisis, the appropriate response to the crisis plan, which depends on our strong balance capacity, and financial and operational flexibility of the common development of the entire group stronger than before the crisis. After the economic crisis, we do not have as many competitors as a strategy to reduce the number of flights. Our approach is to focus on market changes and timely changes, such as during the crisis, we must reduce the number of business class seats, an increase of economy class seats, which gives us a lot of new customers. In order to reduce costs, we have taken effective measures to reduce the other staff working hours, lay in this way, we and employees together through this crisis. European airline industry need to "pan-European" of the Bill of European integration, the sky is even more important than ever, which was discussed for nearly a decade-old problem can be passed inconclusive. "China Business": remove the financial crisis, in terms of climate impact on the aviation industry is another very important issues, such as this year's "4.14" volcanic ash had led to overall disruption of air traffic in Europe, official data showed the ash to the European Union National Aeronautics and business loss of 25 billion euros, Lufthansa also affected. Aviation industry operators directly affected by the external environment and intense, how to uncontrollable factors such risks as low as possible? 沃尔夫冈麦 Asia Huber: Icelandic volcanic ash caused by the blockade of the airspace is not only affected the aviation industry, and even the entire economy. I think today the serious consequences of Icelandic volcanic ash is overvalued or undervalued in the end is not yet clear, but the relentless experience has shown that we need to be a "pan-European" concept to deal with similar situations, "European Sky" bill more important than ever, which was discussed for nearly a decade of problems can be adopted is inconclusive, but we urgently need to address this issue. "China Business": China's market share to account for the overall share of the number of Lufthansa? What is the future of business in China, a new development, whether it decided to increase the number of destinations or flight routes? 沃尔夫冈麦 Asia Huber: Lufthansa's strategy to enter the Chinese market step by step, from the first only once a week flights to Beijing seven times a week now, and later increased in Shanghai, Guangzhou, Nanjing and so on. Now, then calculate an average, every day between Lufthansa to fly between Europe and China, the number of flights is about 10 times, and now we have to do is to help further expand the work of visitors from China arrived in Europe after they can no longer Go to 154 other European cities. Lufthansa's intercontinental routes currently the biggest piece of income comes from the trans-Atlantic routes, which gradually become increasingly important Asian market, and now Asia-Pacific market accounted for 20% of the market share of 25% or so. As the business develops, we found that the composition of the passengers, many changes have taken place, such as the start time of opening of routes, mainly German passengers take our plane to China, are now seeing a lot of passengers from other countries in Europe Lufthansa plane to China, another large number of Chinese passengers aboard the Lufthansa plane to go to Europe, now the ratio is about 50% to 50%. We are very pleased to see changes in the proportion of passengers. Must take into account the returns to buy A380 A380 can be carried by an unprecedented number of passengers, just to meet the incremental demand for passenger flights without adding extra, which will help ease the current airport's traffic congestion. "China Business": The weakest period of the aviation industry, Lufthansa has ordered 15 Airbus in one fell swoop A380 aircraft, how do you make this decision? After receiving A380, Lufthansa to put the aircraft to and from Beijing - Frankfurt route, which is based on what kind of consideration? 沃尔夫冈麦 Asia Huber: This decision is based on the characteristics of Lufthansa's own determined. We believe that a long period of time, the demand for liquidity will have a lot of growth. Airbus A380 aircraft will be an unprecedented number of carriage of passengers, and these just to meet the incremental demand for passenger flights without adding extra, which will help ease the current airport's traffic congestion. Lufthansa originally planned route from Beijing to Frankfurt A380 flights per week operating three shifts, but the model is in the promotion period, the Chinese authorities called on Beijing Capital International Airport every week can only operate a group of A380. "China Business": the cost of the Airbus A380 aircraft is very high, some people think that Lufthansa is difficult to recover the cost within 5 years, do you think will be better hiring mode, you want to recover these costs? 沃尔夫冈麦 Asia Huber: For us, make sure to take into account the return on investment, the aircraft which is very expensive, but the return flight can bring us the potential is enormous. The cost per seat is for us more attractive, fuel efficiency is high, the flight will not take a lot of fuel. The operation of the aircraft can bring a significant revenue growth for us, If we had not taken into account, certainly will not do this investment. Lufthansa Group has always been a very good liquidity position, the Group of 80% of the funds is unconstrained, there is greater flexibility for investment. At present, our current amount of about 56 billion euros, 2.3 billion euros more than the strategic plan more than twice. These funds will be used for modernization of fleet investment, as long as the new models will have a better return on investment, we will adhere to the investment. Assuming the global economic downturn, return on investment less attractive, we will stop investing, which fully reflects the flexibility to liquidity funds. Lufthansa has been doing long-term planning, which ensures that our financial and operational sustainability of development, so that we become long-term reliable partner. "China Business": Airbus A380, the requirements for the airport is very high, organizations may need to reschedule flights around the world, and to transform some of the airport terminal, the current number of airports in the world capable of carrying A380? Do you think the airport will become a Lufthansa A380 Transport 15 is a bottleneck to maximize? Lufthansa is also booked a Boeing 787? 沃尔夫冈麦 Asia Huber: More and more airports are on the A380's fully prepared to do, especially noteworthy is the Capital Airport T3, put into operation in 2008, the date of the arrival of the A380 full of plans, China's airport is the best prepared. Aircraft in our directory now has 146 different types of aircraft, in the period 2010 to 2015, directory total value of these aircraft will cross the 1.3 billion euros, at present we have not booked 787 aircraft, but we booked 747-8 The new models, I think this model will be used to supplement more in line with A380 and A340-600 between the between the models.

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