Lufthansa Group Faces Pressure for Reforms from Largest Shareholder

Lufthansa Group, the European airline conglomerate, is facing mounting pressure for reforms from its largest shareholder, Klaus-Michael Kühne. The 88-year-old logistics billionaire, who owns nearly 20% of Lufthansa Group's shares, has been vocal about his dissatisfaction with the group's performance.

Kühne's Criticism and Demands

In recent interviews, Kühne sharply criticized falling service levels at both Lufthansa and Swiss International Air Lines, which he flies around 30 times per year. He expressed particular frustration with cramped planes operated by Helvetic Airways, the extensive use of Air Baltic on Swiss routes, and what he calls the decline of the Lufthansa core brand.

"The service levels at Lufthansa and Swiss have fallen significantly... The Lufthansa brand no longer compares with Emirates or top Asian carriers." — Klaus-Michael Kühne

Kühne's criticism is not limited to him alone. Other public figures, including Christoph Babin (Bulgari), Frank Bodin, and Ruedi Noser, have also voiced their dissatisfaction with Swiss International Air Lines' worsening service and high prices.

Swiss' Attempt at a Turnaround

In response to the criticism, Swiss recently introduced its first Airbus A350 (HB-IFA) aircraft, which was celebrated with military jets escorting it into Zurich and a large public audience. CEO Jens Fehlinger presented the arrival as a historic milestone for the airline.

Swiss plans to roll out 10 A350s by 2030 and is introducing a premium upgrade across cabins, service, and lounges, dubbed "Swiss Senses." Lufthansa is also deploying its own version of this upgrade, called "Allegris."

Financial Pressure and Kühne's Influence

Lufthansa Group, which comprises 10 airlines and generates 37.6 billion euros in revenue, has been struggling financially. The group's margin stands at a mere 4.4%, significantly lower than its competitors such as IAG (17.3%), Ryanair (13.2%), EasyJet (6.3%), and Air France-KLM (5.1%).

Kühne, along with his close confidant Karl Gernandt, who joined the Lufthansa supervisory board in 2023, has been exerting pressure on management to implement reforms. Last year saw significant changes at the top, including the replacement or departure of four board members.

Quality and Reliability Problems

Both Swiss and Lufthansa have fallen in global rankings due to quality and reliability issues. Swiss now ranks between 10-18 overall, while Lufthansa lost its Skytrax 5-star rating three years ago. Aging fleets, particularly the A340s, contribute significantly to these problems.

According to Flightright, Eurowings, Lufthansa, and Swiss topped Europe's worst performers in terms of punctuality and cancellations.

Restructuring the Group

Lufthansa is currently undergoing a restructuring program called "Matrix Next Level," which aims to centralize finance, short- and medium-haul planning, sales, and Miles & More. This move reduces the autonomy of individual airlines within the group.

Experts like Gerald Wissel argue that Lufthansa's six-hub structure and fragmented brand strategy are outdated. CEO Carsten Spohr has outlined 700 measures to reach an 8-10% margin, including cutting 4,000 administrative jobs.

Looking Ahead

For Swiss, the introduction of the A350 and quality upgrades represent key steps towards improvement. However, deep structural issues such as punctuality, fleet age, wet-lease dependence, and group-wide inefficiencies remain. Kühne's pressure is likely to continue shaping Lufthansa Group's strategy, with further consolidation across its brands expected.