Case Notes/Answers
Lufthansa 2012, by Heike C. Worner
Discussion Questions:
1. What are the key challenges for Lufthansa in 2012?
2. What were the challenges and major milestones for Lufthansa over the last 30 years?
3. What are the environmental influences affecting the European airline industry in 2012?
4. How attractive is the European airline industry in 2012?
5. What are the internal strengths and weaknesses of the passenger airline segment of
Lufthansa in 2012?
6. Which strategic options are available to Lufthansa and how could they be
implemented?
, W15244
Teaching Note
LUFTHANSA 2012
SYNOPSIS
This case deals with Deutsche Lufthansa AG (Lufthansa), the largest airline group in the world, and its
competitive position in the marketplace in an age of high fuel prices and tremendous changes in the
global competitive landscape. The chief executive officer of the Lufthansa Group, Christoph Franz,
urgently needs fresh ideas and a strategy to sustain and strengthen Lufthansa’s competitive position. The
Lufthansa short-haul segment has been struggling to be profitable following the entry of low-cost airlines
in Europe at the end of the 1990s.
Recently, a new challenge has emerged from the Persian Gulf region. The three largest Gulf carriers
Emirates, Etihad Airways and Qatar Airways, as well as Turkish Airlines, are now threatening Lufthansa
on the traditionally profitable long-haul segment. Having ignored the threat of low-cost airlines in the
past, Franz must now be better prepared to respond to this invasion of Lufthansa’s profitable long-haul
business. By offering very competitive rates, the Gulf carriers are able to attract passengers via their hubs
in Dubai, Abu Dhabi and Doha, particularly on routes to Southeast Asia, India and Australia. In addition,
Turkish Airlines has also enjoyed rapid growth in recent years. Following privatization, Turkish Airlines
has set a growth agenda to transform itself into a global player and is backed by strong governmental
support. With increasing competition from these carriers, it is very important that Lufthansa finds
adequate strategic options for sustaining and further expanding its leading market position.
CASE OBJECTIVES
This case can be used to illustrate how a legacy carrier has to transform to remain competitive in the
future. In such an unattractive and challenging industry environment, an airline like Lufthansa has to
build on its strengths, find innovative ways to lower costs and evaluate the possibilities for cooperation in
this new era of competition. The case highlights how a thorough strategic analysis enables the formulation
of alternatives on multiple strategic levels and shows the importance of strategic choices in sustaining the
leading market position. The case also includes a vast amount of financial data that support the evaluation
of the strategies and performance of Lufthansa and its new competitors.
Lufthansa 2012, by Heike C. Worner
Discussion Questions:
1. What are the key challenges for Lufthansa in 2012?
2. What were the challenges and major milestones for Lufthansa over the last 30 years?
3. What are the environmental influences affecting the European airline industry in 2012?
4. How attractive is the European airline industry in 2012?
5. What are the internal strengths and weaknesses of the passenger airline segment of
Lufthansa in 2012?
6. Which strategic options are available to Lufthansa and how could they be
implemented?
, W15244
Teaching Note
LUFTHANSA 2012
SYNOPSIS
This case deals with Deutsche Lufthansa AG (Lufthansa), the largest airline group in the world, and its
competitive position in the marketplace in an age of high fuel prices and tremendous changes in the
global competitive landscape. The chief executive officer of the Lufthansa Group, Christoph Franz,
urgently needs fresh ideas and a strategy to sustain and strengthen Lufthansa’s competitive position. The
Lufthansa short-haul segment has been struggling to be profitable following the entry of low-cost airlines
in Europe at the end of the 1990s.
Recently, a new challenge has emerged from the Persian Gulf region. The three largest Gulf carriers
Emirates, Etihad Airways and Qatar Airways, as well as Turkish Airlines, are now threatening Lufthansa
on the traditionally profitable long-haul segment. Having ignored the threat of low-cost airlines in the
past, Franz must now be better prepared to respond to this invasion of Lufthansa’s profitable long-haul
business. By offering very competitive rates, the Gulf carriers are able to attract passengers via their hubs
in Dubai, Abu Dhabi and Doha, particularly on routes to Southeast Asia, India and Australia. In addition,
Turkish Airlines has also enjoyed rapid growth in recent years. Following privatization, Turkish Airlines
has set a growth agenda to transform itself into a global player and is backed by strong governmental
support. With increasing competition from these carriers, it is very important that Lufthansa finds
adequate strategic options for sustaining and further expanding its leading market position.
CASE OBJECTIVES
This case can be used to illustrate how a legacy carrier has to transform to remain competitive in the
future. In such an unattractive and challenging industry environment, an airline like Lufthansa has to
build on its strengths, find innovative ways to lower costs and evaluate the possibilities for cooperation in
this new era of competition. The case highlights how a thorough strategic analysis enables the formulation
of alternatives on multiple strategic levels and shows the importance of strategic choices in sustaining the
leading market position. The case also includes a vast amount of financial data that support the evaluation
of the strategies and performance of Lufthansa and its new competitors.
