Lufthansa is set to cut 1,000 jobs. Here’s why.

Story highlights His 2020 budget promises to make the company leaner and to save 1,000 job It’s been a rocky year for the company that has played a key role in the travel industry…

Lufthansa is set to cut 1,000 jobs. Here's why.

Story highlights His 2020 budget promises to make the company leaner and to save 1,000 job

It’s been a rocky year for the company that has played a key role in the travel industry for decades

As Henry Ford famously said, “If you make a plan, you can achieve almost anything.”

That’s exactly the premise behind how The Lufthansa Group — which covers airlines, cargo and inter-city services — does business, and it’s certainly a very different approach than the modern-day U.S. multinational corporation, where corporate communication centers may be built out of cubicles and procedures and goals have been dubbed “goals.”

In general, the Lufthansa Group is known for its superlative service and frequent announcement that it “gets it.” For example, in the aftermath of the downing of Malaysia Airlines Flight 17 in July 2014, the company vowed to “do everything possible to prevent such a barbaric crime being repeated.”

These considerations are why it’s no wonder Lufthansa shareholders approved one of the largest dividends in the company’s history: a whopping €6.50 ($7.64) per share for 2016, according to a Bloomberg report. After making offers to acquire Air Berlin and British budget airline easyJet, which couldn’t reach a deal with the company, the company announced plans to divest 49.9% of its airline operations and order up to 784 new planes.

Despite its long list of accomplishments, the Lufthansa Group faced a contentious year in 2018, capped off by a pair of airline strikes, with more protests expected over the coming months. This particularly thorny year was compounded by the news that parent company Lufthansa was having financial difficulty and cash was being used to make critical restructuring decisions, including the layoffs of nearly 1,000 people, which might possibly extend over several years.

Although the airline management may not know exactly when or how more job cuts will be ordered, Lufthansa has promised that the cuts — including more than 350 flight attendants — will be accomplished over the next three years. Part of this restructuring entails streamlining the company’s bureaucracy and cutting costs, including debt-servicing costs, by 300 million euros ($358 million) in 2018 alone. In order to ensure this process goes smoothly, Lufthansa chairman Carsten Spohr has vowed to provide a clear, clear explanation of the costs associated with restructuring and emphasize the fact that each job loss is a personal loss for the person and not a consequence of broader problems.

As the core shareholder of the company, the unions’ main goal is to ensure that members feel 100% secure in their employment. However, they must also abide by the company’s desire to at least maintain the capacity of a large-scale airline to meet its customers’ needs. And, according to Deutsche Telekom chairman Jan du Plessis, Lufthansa has already reached an agreement with unions to apply the country’s new laws to best manage restructuring efforts.

To keep the peace as Lufthansa reorganizes, investors will have to give CEO Carsten Spohr continued confidence to make the necessary restructuring decisions, and for the company to continue to cement its award-winning reputation for service.

Originally posted on H&

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