Lufthansa 2000: Manitaining the Change Momentum

Economics, Strategy and Entrepreneurship

2001

In 1991 Lufthansa was almost bankrupt. Eight years later, at the general business meeting on the 16th of June 1999 Jurgen Weber (CEO) announced record results in Lufthansa's more than 70-year history. In eight years, the company had gone from the brink of bankruptcy to becoming one of the world's leading airline companies, a founding member of the STAR ALLIANCE - the airline industry's most comprehensive network - aspiring to become the leading aviation group in the world. Lufthansa had undergone some radical changes that reversed a record loss of DM 730 million in 1992 to a record pre-tax profit of DM 2.5 billion in 1998 (an increase of 42% compared to 1997 when the pre-tax profit was DM 1.75 billion) Revenues increased by 4.8% from DM 21.6 billion in 1997, to DM 22.7 billion in 1998. The Seat Load Factor (SLF - proportion of seats filled) reached 73%,a record performance in Lufthansa's history (1.5 percentage points increase compared to 1997 and 9 percentage points increase compared to 1991). After the first step of the turnaround it was apparent that transformation had just begun and that a much more fundamental change had to follow to assure the company's future. The Lufthansa Executive Board (Vorstand) and the Supervisory board (Aufsichtrat) decided to follow a concept of sustaining renewal (redevelopment) at 3 levels, operational, structural and strategic. In 1999, none of these processes were fully completed. In fact, sustaining the change process was seen as the key management challenge.

CS-01-001

EU RTN Project

Institute of Finance and Accounting

GOSHAL, S

No