Lufthansa has shut down its regional subsidiary airline CityLine citing ‘significantly increased kerosene prices’ as the world battles oil due to the Middle East crisis
A major airline has ended its regional operation due to “significantly increased kerosene prices” following the crisis caused by the Iran war.
Global oil prices have soared since the start of the Middle East crisis at the end of February, and now Lufthansa has decided to shut down its subsidiary airline CityLine. The German carrier said it was speeding up a corporate strategy meaning that “the 27 operational aircraft of Lufthansa CityLine will be permanently removed from the flight program”.
The decision came into effect on April 18, the company said with a note on its website, “in order to reduce further losses of the loss-making airline”. A statement also read: “The Canadair CRJ aircraft are nearing the end of their technical operational capability and have comparatively high operating costs.”
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At the same time Lufthansa is reducing its long-haul capacity, which will have a total of six intercontinental aircraft at the end of the summer flight schedule, reported the Express.
The last four remaining Airbus A340-600s will leave the fleet in October, thus bringing the era of this aircraft type at Lufthansa to a definitive end, the company said, with “the final farewell to this aircraft type is planned for next year”.
The kerosene consumption of the Lufthansa Group’s passenger airlines is claimed to be hedged at an above-average rate of around 80% taking into consideration crude oil prices.
The airline added: “However, the remaining 20% must still be purchased at significantly increased market prices. This particularly expensive portion of fuel requirements will be reduced by around 10 percent.”
Till Streichert, chief financial officer and CFO of Lufthansa Group, said: “The package for accelerated implementation of fleet and capacity measures is unavoidable in light of the sharply increased kerosene costs and geopolitical instability.
“The goal is to focus our short- and medium-haul platforms more clearly and make them more competitive. In this regard, we had already identified the prospective removal of CityLine from our program as part of our strategic development for some time, independently of the current geopolitical crisis.
“The current crisis is now forcing us to implement this measure earlier. This is a painful step, particularly with regard to the colleagues at Lufthansa CityLine. It is therefore all the more important now to find continued employment opportunities within the Group.”
Lufthansa also said “ground staff have already received employment at the newly founded Lufthansa Aviation GmbH,” and added “cockpit and cabin crew were already offered transfer options at the turn of 2024/2025, which provided for employment at Lufthansa City Airlines with multi-year comparable compensation conditions to Lufthansa CityLine”.
According to this offer, any differences in working conditions were to be offset by a compensation payment. CityLine was founded in 1963, just five years after Lufthansa.
