Lufthansa CEO reveals $540 million annual loss due to delayed aircraft deliveries

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Lufthansa CEO reveals $540 million annual loss due to delayed aircraft deliveries

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James Pearson Route Development Journalist | Simple Flying

By Sky Industry News

Jul 9, 2024

The chief executive of Lufthansa Group has publicly expressed frustrations with aircraft delivery delays. The group had planned to receive up to 30 new aircraft in 2024 but continues facing ongoing delivery delays and uncertainties. Additionally, the group has experienced issues with the PW1100G engine, further impacting its near-term capacity.

Carsten Spohr, the chief executive officer (CEO) of Lufthansa Group, detailed how recent aircraft delivery delays from Airbus and Boeing have significantly impacted the group’s operations. "No aircraft has been delivered on time," he noted, resulting in financial losses amounting to approximately $540 million annually.

Speaking at a business press club in late June, Spohr stated that these delays could cost Lufthansa as much as €500 million ($540 million) per year. Reuters reported his remarks emphasizing that no aircraft has arrived on schedule.

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On multiple occasions, Lufthansa has indicated it chose to reactivate its Airbus A380 following the pandemic due to high demand and long-haul segment delivery delays. The German airline began flying its fifth Airbus A380 in March, with two more scheduled for reactivation in 2024 and 2025.

When announcing its Q1 2024 results—heavily impacted by multiple strikes by labor unions representing the group's employees—Lufthansa Group reiterated plans to receive up to 30 new aircraft in 2024 while warning about repeated delivery delays. “However, due to production problems and delays in certification, there have been repeated postponements in planned aircraft deliveries throughout the industry,” a statement read.

Ch-aviation data showed that seven airlines within the Lufthansa Group—including Austrian Airlines, Brussels Airlines, Lufthansa City Airlines, and Swiss International Air Lines (SWISS)—are awaiting 250 aircraft deliveries. This includes airframes acquired on the second-hand market.

Assessing how much these delays have affected the group is challenging given significant impacts from employee strikes during Q1 2024. Year-on-year capacity growth measured in available seat kilometers (ASK) was reported at 12%. However, unit revenues dropped by 6.3% YoY due to lower yields and increased compensations paid to passengers among other factors.

In addition to both Airbus and Boeing struggling with delivery schedules, Pratt & Whitney—the makers of many aircraft engines including the PW1100G used for Airbus A320neo family—has faced maintenance capacity issues exacerbated by accelerated inspections and removals due to a manufacturing problem.

Lufthansa Group continues facing issues related to this engine but remains increasingly confident about negotiations with Pratt & Whitney over compensation for financial losses. Ch-aviation data indicates that out of their fleet powered by PW1100G engines, 13 are currently stored while another 23 are undergoing maintenance.