Lufthansa Aims for Turnaround in 2026 But Faces Challenges in Cost and Labour Issues

Published on December 18, 2025

Lufthansa, the iconic German airline group, has had a mixed performance in 2025, failing to match the growth rates of its European rivals despite a 26% increase in shares over the last six months. Investors remain cautious about the airline’s ability to recover from years of financial difficulties, particularly due to rising costs, labour struggles, and global headwinds in the aviation sector. While the European airline group has seen some improvement in its stock price recently, Lufthansa still lags behind companies like British Airways’ owner IAG and Air France-KLM, which saw their stocks rise 35% and 44.6%, respectively.

The airline’s underperformance is particularly notable when compared to the success of its competitors. Since Carsten Spohr became CEO in 2014, Lufthansa shares have fallen by around 18%. This decline is particularly sharp when looking at its performance after the COVID-19 pandemic, which hit the airline sector hard and has yet to fully recover. In contrast, other major European airlines have shown significant improvements in their stock performance and profitability.

Lufthansa’s Financial Struggles Amid Rising Costs and Labour Issues

Lufthansa’s recent operating margin narrowed from 7.6% in 2023 to 4.4% last year, reflecting growing concerns about cost pressures and labour disputes. Analysts forecast that Lufthansa’s operating margin will improve slightly to 4.8% in 2025, but this remains lower than its competitors, such as IAG and Air France-KLM, which are expected to perform better in terms of profitability. These financial struggles have caused some investor skepticism about Lufthansa’s ability to compete with other European carriers in the coming years.

To address these challenges, Carsten Spohr has unveiled an ambitious turnaround plan aimed at improving profitability in the coming years. This plan includes cutting 4,000 administrative jobs over the next five years and retiring older planes, which will help the airline reduce costs and increase its margins. The company aims for an operating margin of 8% to 10% by 2028-2030, a target that investors are hoping will be achieved in the long term.

The Struggle with Transatlantic Travel and Global Headwinds

Despite these efforts, Lufthansa continues to face challenges, particularly in transatlantic travel, which has experienced a softness in demand. The airline has struggled to recover fully in the North American market, which was traditionally one of its strongest sources of revenue. Global economic uncertainty, combined with rising fuel costs and labor shortages, has added pressure on Lufthansa’s long-haul routes, especially those serving the US and Canada.

Lufthansa’s global headwinds are also linked to the broader aviation market conditions, including rising fuel prices, inflationary pressures, and supply chain disruptions affecting the airline’s fleet expansion plans. In particular, the long-awaited arrival of Boeing jets has been delayed, further impacting the airline’s fleet modernization and growth prospects.

Lufthansa’s Structural Overhaul and Airline Streamlining Efforts

In addition to financial restructuring, Lufthansa is looking to streamline its complex organizational structure, which includes six hubs and nine passenger airline brands. This diverse set of brands ranges from luxury services to budget carriers like Eurowings, and the company is looking for ways to simplify operations to reduce costs. Spohr’s goal is to make the airline more efficient while improving profitability, but the company must balance cost-saving measures with the need to maintain quality and service standards across its various brands.

Investor Confidence: Will Lufthansa Overcome These Hurdles?

Despite the challenges, Lufthansa has received support from some investors, particularly those who believe in the airline’s ability to improve its operating margins and profitability in the future. Spohr’s plans to modernize the airline’s fleet, cut administrative jobs, and focus on higher-margin routes have been received positively by some stakeholders. However, concerns about global competition and rising costs continue to cloud the airline’s future, leaving investors divided on whether the airline can make the necessary changes in time.

For business travelers, Lufthansa’s struggles may raise questions about whether the airline can maintain its position as a leading carrier for long-haul routes between Europe and the US, Asia, and other major international hubs. If the airline’s operational performance does not improve, passengers may be tempted to switch to Air France-KLM, IAG, or other emerging competitors offering better service and more efficient travel options.

Quick Tips for Travelers Considering Lufthansa for 2025

1. Book Early for the Best Rates: With ongoing economic pressure, booking flights early will help secure the best possible prices before further price hikes.
2. Check for Alternative Routes: Given Lufthansa’s competition in long-haul flights, travelers may want to explore other European carriers, like Air France-KLM, for a broader range of destinations.
3. Expect Delays on Long-Haul Flights: Transatlantic routes might experience disruptions, so travelers should be prepared for potential delays.
4. Monitor Fleet Updates: Keep an eye on updates related to Lufthansa’s fleet expansion or delays in the arrival of newer jets, which could affect travel comfort and punctuality.

Conclusion: Lufthansa’s Path to Recovery Amid Challenges

Lufthansa’s efforts to recover from its pandemic losses and improve profitability have met with mixed success. While the airline’s ambitious turnaround plan offers hope for the future, cost struggles, labor challenges, and global competition will continue to weigh on the airline’s ability to catch up with its European rivals. However, with strategic overhauls underway and a focus on higher-margin routes and operational efficiency, Lufthansa may eventually return to its previous standing as a leader in the global airline industry.

Key Points:

• Lufthansa shares are up 26% in the last six months but still underperform compared to rivals.
• Cost and labor struggles continue to affect Lufthansa’s operating margins, which are expected to narrow in 2025.
• Transatlantic travel softness and global headwinds remain significant challenges for Lufthansa.
• The airline is undergoing a structural overhaul to streamline operations and reduce costs.
• Lufthansa’s plans to cut 4,000 jobs and retire old planes as part of its long-term recovery plan.

Source: Disclaimer: The Attached Image in This Article is AI Generated