Lufthansa takes on rivals with revamp of Germanwings airline

City A.M. Reporter
LUFTHANSA, Europe’s biggest airline, launched its re-branded budget carrier Germanwings yesterday in an attempt to cut costs and win back passengers from no-frills rivals.

Germanwings, which is taking over most of Lufthansa’s short-haul flights in Europe, is seeking to re-position itself as a budget airline for business travelers offering extras such as champagne and more leg-room.

Lufthansa shut its short-haul business in January because it had been losing money, mainly due to competition from budget airlines EasyJet, Air Berlin and Ryanair.

The Germanwings revamp is a major part of Lufthansa’s three-year overhaul to boost group operating profit by €1.5bn to €2.3bn by 2015. Like other European airlines, Lufthansa has been hit by competition from low-cost rivals and Middle Eastern carriers.

Lufthansa, Europe’s biggest airline by sales, is in the process of transferring 800 of its cabin crew and 30 planes to Germanwings, where costs are 20-30 per cent lower.

Germanwings aims to make a profit by 2015. In 2011, the last time it published results, its operating loss widened to €52m from €39m in 2010.