Air Transport World

Banking on acronyms. (Lufthansa reorganization)

LEOS, BISAM, LIDO, etc.: Lufthansa's reorganization of its subsidiaries into autonomous companies produces a veritable alphabet soup

HAMBURG -- While profits for shareholders clearly are the goal, what is happening at Deutsche Lufthansa is more complex than the strengthening of the balance sheet per se. Organizational, "cultural" adjustments are in full swing as onetime divisions become autonomous subsidiary companies. At the same time, LH is approaching full privatization with a sharpened focus on state-of-the art technology (the German government still holds 35.68% of the airline's equity).

After a successful financial recovery last year--chain-linked to operational consolidation, restructuring and strategic repositioning--Lufthansa is programming itself to stay in the black through ongoing cost controls and accelerated yield management/ marketing efforts at each level.

Competitive pressures to produce all out remain unchanged, declares Chairman Jurgen Weber. In August, the airline reported that it expected first-half pretax profits to exceed last year's level when Dm135 million was earned.

But aside from Lufthansa's thriving passenger and cargo business, as well as expansion of the highly successful Lufthansa Service global catering arm, key activities revolve around technological innovation, as reflected by an alphabet soup of acronyms such as LEOS, BISAM and LLDO. In the middle of the fray is Lufthansa Technik AG, one of the airline group's leading autonomous enterprises--like Lufthansa Cargo legally a separate entity, independently operated and managed. And it also goes by one of those pithy tongue twisters that Lufthansa people seem to love: LTAG.

Operating as an autonomous corporate subsidiary since last Jan. 1, "we were given a starting capital of Dm500 million and then, we were on our own," explains Executive Board Chairman and CEO Wolfgang Mayrhuber. …

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