Viewpoint

The Boys In Yellow And Blue Step Up The Pace

Europe may still be in the grip of winter, but there’s no such thing as hibernation at Lufthansa Technik (LHT). On Friday, the MRO giant announced an “extensive” administrative reorganisation as part of the Lufthansa Group’s plan for the future, which, in a move guaranteed to give British football fans uncomfortable flashbacks, has been named ‘SCORE’.

“We have already implemented many innovations in production and optimised processes there, and now we intend similar improvements in administration,” said August Henningsen, chairman of the executive board, LHT.

Make no mistake about it, LHT’s distinctly Germanic attention to detail means the organisational revamp will probably go right down to reordering the pencils to discover hitherto unknown efficiencies in stationery storage.

Since early 2012, LHT has had a crack team of 200 working on a ‘SCORE’ project called ‘NETwork’ (yes, we get it – the ball’s in the back of the net) in which all structures and processes were critically assessed. Following feasibility testing, proposals for improvement have now been turned into a package of over 200 measures designed to help the company to respond more effectively to customer needs.

LHT’s changes in Germany, to be implemented by 2015, will include: the centralisation of business administration functions; the bundling of purchasing activities in competence centres; increased shared services in the personnel area; and stronger regionalisation in sales. The reorganisation “will likely” involve the loss of 650 jobs.

The MRO certainly means business, having conducted a substantial restructuring last year at its Swiss division which included a workforce reduction from 304 to 82 individuals. Looking further afield, LHT also shut down its engine overhaul JV with Qantas, LTQ Engineering, in July 2012.

But it’s not really LHT which needs to cut out the flab – everyone knows it’s already a lean, mean fighting machine. The MRO posted an operating profit of €227m in 3Q, 2012 – 14.6 per cent higher than the same period the year before.

It is the Lufthansa Group which needs to keep up its fitness regime, after offloading its biggest loss-maker (otherwise known as bmi), restructuring Austrian Airlines and bringing decentralised traffic together under Germanwings. “‘SCORE’ works”, said Lufthansa in its 3Q, 2012 interim report – but added that “the results are not yet as visible as we would wish”.

Over the coming year, then, Lufthansa needs to try to emulate its high-performing maintenance division: strengthen the defence and stick in a few more goals.

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