This is a real strategic defeat for the Lufthansa airline group, and one that its CEO, Carsten Spohr, now candidly concedes. Eurowings is losing money, a lot of money, putting a strain on the parent company's accounts. In the first quarter of 2019, the Lufthansa group lost some 342 million euros, while last year Eurowings alone lost 231 million euros. Eurowings is suffering particularly from the fierce competition on point-to-point routes, which have become the preserve of low-cost airlines.
Back in April, the carrier announced a freeze on any increase in its offer. But this is still not enough. Eurowings will have to reduce its costs by 15 % by 2022 through a simpler structure, in particular with a fleet made up entirely of Airbus 320 family aircraft and a concentration on the Eurowings brand alone.
From this winter, the company will also be refocusing on the short and medium-haul business alone. She thus gives up the operation of its long-haul routes offered from Düsseldorf, Frankfurt and Munich. However, these routes will not disappear from the Lufthansa Group's offer and will be taken over by the scheduled network airlines. It is also likely that Brussels Airlines or Austrian Airlines will be asked to operate some of the seven long-haul A330 aircraft in the Eurowings fleet.
As part of the same drive to rationalise its brands, the Lufthansa Group has also decided to hive off a further Brussels Airlines out of Eurowings. The Belgian airline is thus returning to its primary role as a network carrier, centred on its Brussels hub and pursuing group synergies with Lufthansa, Austrian Airlines and Swiss.
Eurowings, which until now was Europe's third largest low-cost airline with over 200 aircraft, should therefore end the year with a fleet of 130 aircraft. However, Eurowings is only expected to return to profitability in the second half of the year.by 2021This compares with an original profit forecast for 2019.
