FOCUS-'Mr Lufthansa' taps crisis playbook to tackle costs, union battles

By Ilona Wissenbach and Joanna Plucinska

FRANKFURT, March 4 (Reuters) - At Lufthansa's LHAG.DE base overlooking Frankfurt's bustling international airport, chief executive Carsten Spohr has his eye firmly on his sprawling airline empire as giant screens flash flight delay data and other performance indicators in the background.

Spohr, a straight-talking former pilot, shows no sign of loosening his grip after more than a decade steering a firm that spans Germany's flagship carrier to ITA Airways and Eurowings, including through the pandemic and a deadly crash in 2015.

One of the most prominent - and at times divisive - airline chiefs, Spohr is looking to use his crisis experience to ride out challenges ranging from geopolitical disruption to plane delivery delays, and keep wary investors onside after years of slipping shares and damaging fights with unions.

Spohr told Reuters that he was focused on efficiencies, centralising management of the group's 12 airlines and betting on more long-haul flights in the year ahead.

"It helps to have been a pilot to understand the company inside out," Spohr, who joined Lufthansa in 1994, told Reuters in his glass-walled top-floor office.

"Anybody can manage a company in sunny weather. I think it's crisis situations in the end where you show your leadership."

NO PLANS FOR EARLY EXIT

Lufthansa's share price is up more than 60% since early 2025 as Spohr moves to shake off the group's regional laggard status versus Air France-KLM AIRF.PA and British Airways owner IAG ICAG.L.

That's taken some heat off, but margins have narrowed and the shares still languish below levels seen at the start of Spohr's tenure.

"The company is significantly improving on all fronts right now," Spohr said, including punctuality and operations, adding that he currently has no plans to step down before his contract ends in 2028 although "that's up to my board and my wife to decide".

More than 80% of flights operated by Lufthansa arrived on time at the airline's Frankfurt and Munich hubs in the first nine months of 2025, its best punctuality rate in 10 years.

But Spohr has acknowledged that Lufthansa - which he once called the group's "problem child" - has struggled. He wants to grow margins back to 8-10% between 2028 and 2030 from 4.4% in 2024.

That may require more of Spohr's "tough", "impatient" approach, which some investors and people close to the CEO said had previously caused tension.

"There have also been regular conflicts between the board and the unions over the past few years," said Hendrik Schmidt from Lufthansa investor DWS, who praised Spohr's long experience. "The board itself must function as a team."

Ryanair RYA.I Chief Executive Michael O'Leary, when asked about Spohr's performance, praised his strong track record - though admitted he could rub people the wrong way.

"I'm sure he has probably upset a few people along the way, but I think he has done a terrific job," he said.

Lufthansa will publish its full-year results on Friday.

STANDOFF WITH UNIONS

Spohr needs to convince his backers that Lufthansa's worst days, marred by missed targets, delivery delays, disappointing operating margins and expensive strikes, are in the past.

The task wasn't helped when hundreds of Lufthansa flights were cancelled as pilots and flight attendants walked out just last month, disrupting travel for 100,000 passengers.

Andreas Pinheiro, president of Lufthansa union VC, said hopes for smooth relations when Spohr took over did not last long.

"A pilot at the helm – that had to be good for the flight crew," he said, adding that "scepticism quickly mixed with the euphoria" as workers were "deliberately pitted against each other".

Spohr acknowledged the complexity of talks with labour representatives, but said that deep-pocketed state-backed Middle Eastern carriers didn't face the same issues hiring and firing people. "It's just not a level playing field," he said.

Peter Gerber, the CEO of rival German airline Condor who once worked under Spohr at Lufthansa, defended his handling of union disputes and praised his quick thinking during a crisis and in social environments - where he could be a "stand-up comedian".

"He has perhaps lived and breathed the airline industry more than any of us," Gerber told Reuters. "The Germanwings crash in 2015 was probably the most difficult period of his career. It is largely thanks to him that Lufthansa emerged unscathed."

'MR LUFTHANSA'

Analysts and investors consider Lufthansa's complex fleet of ageing Boeing BA.N and Airbus AIR.PA aircraft a major drag. Spohr says new deliveries will allow the airline to finally unblock growth, including greater fuel efficiency and cheaper maintenance costs.

Following losses in 2024, the core Lufthansa brand is also being overhauled, including major investment in fleet renewal and revamping outdated cabins.

Those close to Spohr talked about his prominent status and high level of control. One former aviation official who worked with Spohr described him as "effectively a demigod".

Ingo Speich at Deka Investment, which has a stake in Lufthansa, said if Spohr met his targets it would burnish his legacy, adding that "no important decision bypasses him".

"Carsten Spohr is Mr Lufthansa," he said.

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